A week after rising $44 million, India’s forex reserves declined by $1.268 billion to $561.583 billion for the week ended January 6, according to the latest data from the Reserve Bank of India (RBI). The overall reserves had jumped by $44 million to $562.851 billion in the previous week after two consecutive weeks of the slide.
In October 2021, the country’s foreign exchange kitty reached an all-time high of $645 billion. The reserves had been declining as the central bank deployed the reserves to defend the rupee amid pressures caused by global developments.
The forex reserves during 2022 saw a decline due to the RBI intervention in the currency market to control the volatility and bolster the rupee. The RBI net sold $33.42 billion till September, Union finance minister Nirmala Sitharaman had said in the Lok Sabha earlier.
Anil Kumar Bhansali, head (treasury) at Finrex Treasury Advisors, said, “India had Forex reserves to the tune of $145.9 billion in 2005-06 which increased to $322.16 billion in 2015-16. In March 2019, the reserves increased to $411.91 billion and at the start of the pandemic, the reserves further increased to $475.56 billion. On October 29, 2021, the reserves were at the highest level of $642.02 billion as the RBI absorbed all inflows in the form of FDI, FPI and NRI deposits which came during the pandemic and after it.”
He, however, added that the rupee started weakening from 74.57 levels at the start of January 2022 to about 83 levels towards the end of 2022 year weakening by about 11.30 per cent during the year. This was on the back of foreign investment outflows, dollar strengthening, costlier crude oil, and high inflation across the world.
The latest Weekly Statistical Supplement released by the RBI showed that during the week to January 6, foreign currency assets (FCA), a major component of the overall reserves, dropped by $1.747 billion to $496.441 billion.
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 increased by $461 million to $41.784 billion, it said. The special drawing rights (SDRs) were up by $35 million to $18.217 billion, the apex bank said.
The country’s reserve position with the International Monetary Fund (IMF) was down by $18 million to $5.141 billion in the reporting week, the data showed.
(With Inputs From PTI)
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