Foreign exchange reserves drop to $524.52 bn, lowest since July 2020

Press Trust of India

MUMBAI: India’s forex reserves dropped by $3.847 billion to $524.52 billion for the week ended October 21, the Reserve Bank of India (RBI) said on Friday.

The overall reserves had dropped by $4.50 billion to $528.37 billion in the previous reporting week, and have been declining for many months now.

In October 2021, the country’s forex kitty had reached an alltime high of $645 billion. The reserves have been declining as the central bank deploys the kitty to defend the rupee amid pressures caused majorly by global developments.

Foreign currency assets (FCA), a major component of the overall reserves, saw a drop of $3.593 billion to $465.075 billion during the week to October 21, according to the Weekly Statistical Supplement released by the RBI on Friday.

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 saw a decline of $247 million in value to $37.206 billion, it said.

The Special Drawing Rights (SDRs) were up by $7 million to $17.44 billion, the apex bank said.

The country’s reserve position with the IMF was down by $14 million to $4.799 billion in the reporting week, the central bank data showed.

The rupee declined by 14 paise to close at 82.47 against the US dollar on Friday as a stronger greenback in the overseas markets weighed on the local unit.

However, a positive trend in domestic equities and fresh foreign fund inflows capped the rupee’s loss, traders said.

At the interbank foreign exchange market, the local currency opened weak at 82.39 and witnessed a high of 82.29 and a low of 82.49. It finally settled at 82.47 against the American currency. The rupee had closer higher at 82.33 against the dollar on Thursday.

“Indian Rupee consolidated in a narrow range today. The strong dollar index put downside pressure on the rupee. However, positive domestic equities and weak crude oil prices cushioned the downside. FII inflows also supported the rupee at lower levels,” Anuj Choudhary - Research Analyst at Sharekhan by BNP Paribas, said.