Finance
The Reserve Bank of India’s foreign exchange reserves fell by $1.5 billion to $575.27 billion in the week ending February 3, according to the most recent central bank data.
The RBI’s reserves fell primarily due to a drop in the central bank’s foreign currency assets, which fell $1.3 billion to $507.69 billion in the previous week, according to the data.
The rupee fell 0.4% against the dollar in the week ending February 3, ending at 81.84 per dollar.
Analysts believe the drop in reserves last week was caused by the RBI selling dollars in order to calm the rupee after the Adani crisis. The Adani group’s stock plummeted following allegations of malpractice by the US-based research firm Hindenburg.
Foreign portfolio investors were said to have sold Indian equities as the stock fell, culminating in the Adani group canceling its follow-on public offer.
The drop last week follows a recent surge in the central bank’s reserves.
Following a $100 billion decline in reserves from February to September 2022, the RBI has been replenishing its foreign exchange reserves over the last three months.
From June to October 2022, the RBI was a net seller of US dollars in the currency market as it sought to reduce excessive volatility in the rupee’s exchange rate amid the Ukraine war and aggressive Fed rate hikes.
The foreign exchange reserves increased by $28.9 billion since September to $561.6 billion as of January 6, covering more than nine months of imports projected for 2022-23, according to the RBI staff. For the first time since May 2022, the central bank net bought dollars in November 2022.
Source:BS
