India’s foreign exchange (forex) reserves declined $5.401 billion to $643.162 billion during the week ended April 12, according to the latest RBI data. In the previous reporting week, overall reserves had risen $2.88 billion to a new high of $648.562 billion.
It can be noted that in September 2021, the country’s forex kitty reached an all-time high of $642.453 billion, which was breached in March this year. The reserves took a hit as the central bank deployed the kitty to defend the rupee amid pressures caused majorly by global events, but there had been a steady accretion over the past few months.
Sanjeev Agrawal, president of PHD Chamber of Commerce and Industry, said, “Despite geopolitical headwinds and uncertain economic environment, India’s foreign exchange reserves remain intact at $643 billion, supported by India’s attractiveness towards global investors and a strong exports growth trajectory.”
For the week ended April 12, the foreign currency assets, a major component of the reserves, decreased by $6.513 billion to $564.653 billion, according to the data released on April 19.
Expressed in dollar terms, the foreign currency assets include the effect of appreciation or depreciation of non-US units like the euro, pound and yen held in the foreign exchange reserves.
Gold reserves continued their rise and increased by $1.241 billion to $55.798 billion during the week. The special drawing rights (SDRs) were down $93 million to $18.077 billion, the RBI said.
India’s reserve position with the IMF was also down by $35 million to $4.634 billion in the reporting week, the central bank data showed.
The Rupee Outlook
The Indian rupee fell to a new low of 83.70 in the non-deliverable forward (NDF) market but the RBI ensured it remained near 83.50 by intervention in NDF as well as local OTC (over-the-counter) markets, said Anil Kumar Bhansali, head (treasury) and executive director of Finrex Treasury Advisors LLP.
On Thursday, the RBI sold almost $2 billion and ensured that whatever dollars it bought were used during the rainy times as assured by the RBI Governor in the press conference after the recent MPC meeting.
“The rupee remained in the range and closed at day’s high as the RBI sold dollars and ensured a higher closure at the weekend. The market is in a wait-and-watch mode as we await the geopolitical tensions to end,” Bhansali added.
Disclaimer: The copyright of this article belongs to the original author. Reposting this article is solely for the purpose of information dissemination and does not constitute any investment advice. If there is any infringement, please contact us immediately. We will make corrections or deletions as necessary. Thank you.
