India's Forex Reserves Dip: Gold Holdings Decline, Import Cover at 11 Months

• India's forex reserves fell by $6.711 billion to $717.064 billion in the week ending February 6.
• The decline was primarily due to a $14.208 billion decrease in gold reserves, despite a rise in Foreign Currency Assets (FCA).
• Current reserves can finance 11 months of imports, with the RBI assuring the external sector's sufficiency.
• Forex reserves act as a protective shield for import bills and currency stabilization, including US dollars, Euro, Yen, and Pound Sterling.
• RBI intervenes by buying dollars when the rupee strengthens and selling when it weakens, to control currency fluctuations and inflation.