Foreign exchange reserves fall again due to reduction in gold reserve, know what will be the effect?

The country’s gold reserves in value declined by $ 705 million to $ 37.057 billion. At the same time, foreign currency assets also declined by $ 120 million to $ 470.73 billion.

Premature steps on inflation would have harmed

The country’s foreign exchange reserves declined by $1.09 billion to $529.99 billion in the week ended November 4. The reason for this is a huge decline in the gold reserves of the country. This information has been received in the data released by the Reserve Bank of India (RBI) on Friday. Last week forex reserves It increased by $ 6.56 billion to $531.08 billion, the fastest growth in a single week during the year.

A year ago in October, 2021, the country’s foreign exchange reserves had reached an all-time high of $ 645 billion. For this the central bank is taking help from currency reserves.

How much did the stock fall

According to data released by the Reserve Bank on Friday, foreign currency assets (FCAs), considered an important component of currency reserves, declined by $120 million to $470.73 billion during the week ended November 4. Foreign currency assets denominated in dollars, ie, foreign currency assets held in foreign currency assets, reflect the effects of a decrease or increase in the value of non-dollar currencies such as the euro, pound and Japanese yen.

According to the data, the country’s gold reserves in terms of value declined by $ 705 million to $ 37.057 billion. The central bank said that the special drawing rights (SDRs) have come down by $ 235 million to $ 17.39 billion. According to the data, in the reporting week, the country’s reserves kept in the International Monetary Fund (IMF) also declined by $ 27 million to $ 4.82 billion.

What is the effect of change in stock

Foreign exchange reserves protect the economies of any country from shocks from other economies. Along with this, reserves also control the fall in domestic currency. Which helps in keeping the import bills within the limits of import dependent economies. At the same time, with strong reserves, countries around the world remain confident about payments and business can continue without any difficulty.

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Foreign exchange reserves in Sri Lanka and Pakistan are at lower levels. Because of this, the currency of these countries has broken down a lot and the import bill has increased so much that these countries are either unable to import tax or they are forced to take loans at high rates.

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