Finance
The Reserve Bank of India’s (RBI) foreign exchange reserves fell $3.8 billion to $524.52 billion in the week ending October 21, according to the most recent data. The current reserve level is the smallest since July 24, 2020.
The drop in reserves is primarily due to a drop in the RBI’s foreign currency assets, which fell $3.6 billion to $465.08 billion in the week ending October 21.
According to analysts, the previous week’s drop in reserves was largely due to the RBI’s intervention in the currency market to support the rupee.
The rupee fell 0.4% against the US dollar in the week ending October 21. Over the same time period, the US dollar index, which measures the US currency against six major currencies, rose 0.6%.
So far in 2022, the Indian rupee has fallen 9.9% against the US dollar.
Since Russia invaded Ukraine in late February, the RBI’s foreign exchange reserves have fallen by more than $100 billion. The reserves stood at $631.53 billion as of February 25.
Last month, RBI Governor Shaktikanta Das stated that revaluation in the face of a stronger dollar was responsible for 67% of the drop in reserves so far this fiscal year.
According to the most recent RBI data, the central bank net sold $4.2 billion in the foreign exchange market in August, following sales of $19 billion in July. In June, the RBI net sold $3.7 billion in the market. The central bank net bought $1.9 billion in the currency market in April, followed by $2.0 billion in May.
The current level of reserves covers imports for nearly nine months. In September 2021, reserves were sufficient to cover nearly 15 months of imports.
Source:BS
