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The country’s foreign exchange reserves fell by $6.69 billion to $564 billion for the week ended August 19, latest data released by the Reserve Bank of India (RBI) showed. The reserves are at its lowest level since October 2020.
In the last two weeks, the foreign exchange reserves fell by almost 9 billion.
According to data released by the RBI on Friday, the fall was mainly due to a decline in foreign currency assets, by $5.8 billion, followed by gold reserves by $704 million.
Foreign exchange reserves hit an all-time high for the week ended September 3, 2021 when it hit $642 billion – which was equivalent to covering more than 14 months of imports projected for 2021-22. In almost one year, reserves are down by $78 billion. The current level of reserves can cover about 9 months of imports projected for 2022-23.
The central bank has been selling dollars in the foreign exchange market aggressively to curb any sharp fall in the rupee, which is one of the main reasons for the reserves to fall. The rupee has fallen almost 7 per cent against the dollar in 2022.
India's foreign exchange reserves plummeted to the lowest in over two years, marking the third straight week of decline as the Reserve Bank of India intervened to prevent the rupee from falling past 80 to the dollar during a week when the dollar surged to over two-decade highs, NDTV reports.
According to the RBI's weekly statistical data, the country's foreign exchange reserves dropped by $6.687 billion to $564.053 billion in the week ended August 19, reaching their lowest level in more than two years and falling for the third consecutive week.
The quantum of fall in the latest week, $6.687 billion, was the largest since mid-July, the report said.
During the week ending August 12, India's import cover dropped by $2.238 to $570.74 billion. Barring the increase in the last week of July, which seems like a statistical blip, India's forex war chest has decreased each and every week since early July. Since Russia invaded Ukraine in late February, it has decreased for 20 of the 26 weeks, it added.
The decline in forex reserves by a little over $67 billion since the Ukraine crisis and nearly $80 billion from all-time highs last year echoes the slide in the rupee from about 74 per dollar to close 80, a level which analysts say the RBI has defended ferociously, NDTV said in its report.
India's forex reserves slumped to the lowest in over two years, marking the third straight week of decline as the Reserve Bank of India, true to its word, intervened to keep the rupee from weakening past 80 per dollar during a week when the dollar surged to over two-decade highs.
The RBI's weekly statistical data showed the country's foreign exchange reserves fell by $6.687 billion to $564.053 billion in the week ending August 19, marking its lowest in over two years and the third week of decline in a row. The quantum of fall in the latest week, $6.687 billion, was the largest since mid-July.
In the week prior, during the week ending August 12, the country's import cover had declined by $2.238 to $570.74 billion. Barring the increase in the last week of July, which seems like a statistical blip, India's forex war chest has declined every single week since early July. It has fallen for 20 of the 26 weeks since Russia invaded Ukraine in late February.
That slump in forex reserves by a touch over $67 billion since the Ukraine crisis and nearly $80 billion from its all-time highs last year echoes the slide in the rupee from about 74 per dollar to near 80, a level which analysts say the RBI has defended ferociously.
Due to the falling foreign currency assets and gold reserves, the reserves of RBI slumped by 6.68 billion. The central bank has shared the data; as per the data, the RBI Forex dipped to $500 billion at the end of August, the lowest of the past 22 months, the previous lowest of RBI forex was on October 2020.
With the fall of a $5.8 billion foreign exchange asset and gold, the reserve has faced a fall of $704 billion; the reveres were lower by $6.7 billion on the week.
Since the beginning of the financial year, the FX reserve has declined by $43.3 billion and $52.8 billion since the calendar year. Simultaneously in the same period, foreign currency assets have declined steadily by $71.8 billion, at $501 as of August 19.
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Reveres had touched their highest at the weekend of September 3, 2021 “Ritika Chabbra also added that forex reserves are likely to remain under pressure in the near term as the US dollar index is back to its mid-July high and oil prices are expected to remain elevated.
