During the week going to end October 21, India’s foreign exchange reserves fell to a new over two-year low of USD 524.520 billion, a drop of USD 3.85 billion from the previous week.
According to RBI data, the country’s forex reserves were 528.367 billion at the end of the week on October 14. According to the most recent RBI data, India’s foreign currency assets, the largest component of its forex reserves, fell by USD 3.59 billion to USD 465.075 billion.
During the most recent week, the value of gold reserves fell by USD 247 million to USD 37.206 billion.
However, the value of India’s Special Drawing Rights (SDRs) with the International Monetary Fund increased by USD 7 million during the week under review, according to RBI data.
For months, forex reserves have been declining due to the RBI’s likely intervention in the market to defend the depreciating rupee against a surging US dollar. Additionally, rising import costs necessitated a greater requirement of reserves for trade settlement.
The Indian rupee has been falling in value in recent weeks, reaching new all-time lows as the US dollar has strengthened against major global currencies. The rupee broke through the 83 mark for the first time in its history last week. So far this year, the rupee has depreciated around 10-12 per cent.
Typically, the RBI intervenes in the market through liquidity management, including the sale of dollars, in order to prevent the rupee from falling sharply.
India’s foreign reserves have fallen by around USD 100 billion since Russia invaded Ukraine in late February, when imports of energy and other commodities became more expensive around the world.
The reserves have fallen by approximately USD 115 billion over the last year.