Finance
The Reserve Bank of India’s (RBI) foreign exchange reserves fell $2.4 billion to $560 billion in the week ending March 10, according to the most recent data.
The drop in foreign exchange reserves was primarily due to a drop in the RBI’s foreign currency assets, which fell $2.2 billion to $494.86 billion the previous week.
Last week, the rupee depreciated 0.1 per cent against the US dollar.
The RBI’s foreign exchange reserves increased $1.5 billion in the week ended March 3, snapping a four-week losing streak. According to currency dealers, the RBI has been selling US dollars over the last six weeks to reduce volatility in the rupee’s exchange rate.
The domestic currency has been volatile since February due to fears of further rate hikes by the US Federal Reserve.
However, the failure of the California-based Silicon Valley Bank in the last nine days has fueled speculation that the Fed will slow its rate hikes. The rupee, on the other hand, has not benefited much from the shift in Fed rate expectations, as a global wave of risk aversion has driven investors to the safety of the dollar.
According to the central bank’s February Bulletin, reserves worth $576.8 billion as of January 27, 2023, cover 9.4 months of projected imports for the current fiscal year.
From June to October of last year, the RBI was a net seller of US dollars in the currency market as it sought to control excessive volatility in the rupee’s exchange rate amid the Ukraine war and aggressive rate hikes by the Federal Reserve. The foreign exchange reserves increased $28.9 billion since September-end to $561.6 billion as on January 6.
Source:BS
