India’s foreign exchange (forex) kitty decreased by $462 million to $590.321 billion for the week ended November 10, according to the latest RBI data. In the previous reporting week, the overall reserves had increased by $4.672 billion to $590.783 billion.
In October 2021, the country’s forex kitty had reached an all-time high of $645 billion. The reserves took a hit as the central bank deployed the kitty to defend the rupee amid pressures caused majorly by global developments since last year.
For the week ended November 10, the foreign currency assets, a major component of the reserves, increased by $108 million to $522.004 billion, according to the Weekly Statistical Supplement released by the Reserve Bank of India.
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 were down by $608 million to $45.515 billion during the week, the RBI said. The special drawing rights (SDRs) were up by $36 million to $18.011 billion, the apex bank said.
India’s reserve position with the International Monetary Fund (IMF) was up by $3 million to $4.791 billion in the reporting week, the data showed.
Rupee This Week
Anil Kumar Bhansali, head of treasury and executive director of Finrex Treasury Advisors LLP, said, “The rupee moved in a range of 83.01 to 83.30 during the holiday-shortened week as the RBI protected one side at 83.28 and, on the other side, oil companies and importers hedged their payables as they got 83.01 to buy taking rupee back to the familiar range of 83.25.”
He said the monthly dollar sale-purchase data for September 2023 showed that the RBI net sold $1.5080 billion while its forward purchases fell from $10 billion in August 2023 to $4.6 billion in September 2023. Thus, the RBI has sold a net $7 billion to protect the rupee from depreciation in September 2023.
“The rupee is expected to remain in a broad range of 83-83.35 and a narrow range of 83.30-30 in the coming week as RBI continues to sell dollars while importers constantly buy dollars. A breakout in the range could be expected if the dollar index falls further below 104 and US yields below 4.30 per cent,” Bhansali said.
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