Finance
India’s foreign exchange reserves decreased for the fourth consecutive week, reaching an eight-month low of $640.28 billion on December 27, according to Reserve Bank of India (RBI) data released on Friday.
The reserves fell by $4.1 billion in the reported week, totaling $13.7 billion over the previous three weeks.
Changes in foreign currency assets are driven by both the central bank’s activity in the forex market and the appreciation or depreciation of foreign assets kept in reserves.
The RBI intervenes on both sides of the forex market to prevent excessive volatility in the rupee.
Rupee plumbing new lows
Last week, the domestic currency fell to a new low of 85.8075, losing over 0.3% of its value.
Concerns about India’s slowing GDP and widening trade deficit have weighed on the rupee, as has the broad-based dollar’s rise amid a hawkish shift in the US Federal Reserve’s policy outlook and expectations for President-elect Donald Trump’s policies.
To combat currency weakness and avoid a large-scale drop, the RBI is believed to have sold dollars through state-run banks.
The rupee closed at 85.77 on Friday. The domestic unit fell 0.2% in the current week, marking the ninth consecutive weekly decline.
The currency reserves also include India’s reserve tranche position with the International Monetary Fund.
Source: IE
