Finance
The Reserve Bank of India’s (RBI) foreign exchange reserves fell by $1.1 billion to $529.99 billion in the week ended November 4, according to the most recent data released by the central bank.
According to data released last week, the RBI’s reserves increased by $6.6 billion in the week ending October 28, the largest increase in several months. According to analysts, a large portion of the increase was due to revaluation.
The latest decline in reserves was primarily due to a drop in the RBI’s gold reserves, which fell by $705 million to 37.06 billion, according to the data.
In the week ended November 4, the RBI’s foreign currency assets fell by only $120 million to $470.73 billion.
The rupee was largely stable against the US dollar in the previous week, with the local currency appreciating 0.04 percent.
The RBI’s foreign exchange reserves have declined sharply since the start of the Ukraine war, owing in part to the central bank’s efforts to smooth out exchange rate volatility. On February 25, the reserves stood at $631.53 billion.
RBI Governor Shaktikanta Das stated in September that revaluation in the face of a strengthening dollar accounted for 67% of the decline in reserves in the current fiscal year.
According to the RBI’s October 2022 Bulletin, foreign exchange reserves totaling $532.9 billion covered 8.7 months of projected imports for the current fiscal year. The reserve level in September 2021 were equivalent to almost 15 months of imports.
However, with the dollar index falling sharply in recent days, currency experts believe the RBI’s reserves will benefit in the future. Since November 3, the US dollar index has fallen more than 5%, owing largely to lower-than-expected US inflation data. Bond yields in the United States have also fallen sharply.
Source:BS
