India's currency reserves declined by $6.687 billion to $564.053 billion in the week ended August 19.

"India's foreign reserves fell to USD 564 billion on August 19, the lowest level since October 2020. The fundamental cause for this drop is a drop in foreign current assets, which the RBI has been utilising in the currency market to cushion the rupee's decline.

Geopolitical uncertainty and the Fed's back-to-back rate rises have weakened developing market currencies, particularly the INR, since the beginning of this year "Prabhudas Lilladher Economist and Quant Analyst Ritika Chhabra stated.

The country's foreign exchange reserves fell by $2.238 to $570.74 billion in the previous week, ending August 12.

With the exception of the last week of July, the reserve has decreased every week. Since Russia's invasion of Ukraine in late February, it has declined for 20 of the 26 weeks.

According to the Weekly Statistical Supplement provided by the RBI on Friday, the decline in reserves for the week ending August 19 was owing to a drop in Foreign Currency Assets (FCA) and gold reserves.

In the reporting week, FCA decreased $5.779 billion to $501.216 billion.

Going forward, Chhabra stated that FX reserves are likely to remain under pressure in the short term,

as the DXY is back to mid-July highs and oil prices are predicted to remain elevated.