India's foreign exchange reserves declined by $12.95 billion to $734.61 billion in the week ended October 2, data released by the Reserve Bank of India on Friday showed, marking the fourth consecutive weekly fall as the central bank continued selling dollars to steady the rupee.
The RBI's Weekly Statistical Supplement showed total reserves dropped by $12.952 billion during the week. Foreign currency assets, the largest component of the reserves, fell by $10.664 billion to $604.747 billion, accounting for the bulk of the decline. Gold reserves also decreased by $2.288 billion to $106.413 billion, while Special Drawing Rights rose marginally by $15 million to $18.656 billion and the reserve position with the IMF slipped $15 million to $4.789 billion.
Down $51 billion from the record high
The reserves have now shed $51.1 billion since touching an all-time high of $785.706 billion in the week ended September 4. The previous week alone had seen a fall of $18.343 billion to $747.557 billion. Market participants attribute the drawdown to a combination of RBI intervention and valuation losses on foreign currency and gold holdings, as crude oil prices surged and US Treasury yields stayed elevated.
Gaura Sen Gupta, chief economist at IDFC FIRST Bank, estimated that the RBI sold about $7.5 billion during the latest reported week, with the balance of the fall largely reflecting revaluation effects. Market estimates suggest the central bank may have net sold about $30 billion in foreign exchange during September alone.
Buffers still comfortable
Despite the sharp four-week slide, RBI Governor Sanjay Malhotra said earlier this week that India retains import cover of about 11 months and reserves equivalent to 94.4 per cent of its external debt. The concessional foreign exchange swap window, which opened on June 8 and closed on August 31, had helped mobilise $143.6 billion in foreign currency inflows by September 18, contributing significantly to the earlier build-up.
Sources:
- Business Standard: India's forex reserves drop for fourth week, down $12.95 bn to $734.6 bn
- The Tribune: India's forex reserves fall by $12.95 billion to $734.61 billion (ANI)
The RBI's Weekly Statistical Supplement showed total reserves dropped by $12.952 billion during the week. Foreign currency assets, the largest component of the reserves, fell by $10.664 billion to $604.747 billion, accounting for the bulk of the decline. Gold reserves also decreased by $2.288 billion to $106.413 billion, while Special Drawing Rights rose marginally by $15 million to $18.656 billion and the reserve position with the IMF slipped $15 million to $4.789 billion.
Down $51 billion from the record high
The reserves have now shed $51.1 billion since touching an all-time high of $785.706 billion in the week ended September 4. The previous week alone had seen a fall of $18.343 billion to $747.557 billion. Market participants attribute the drawdown to a combination of RBI intervention and valuation losses on foreign currency and gold holdings, as crude oil prices surged and US Treasury yields stayed elevated.
Gaura Sen Gupta, chief economist at IDFC FIRST Bank, estimated that the RBI sold about $7.5 billion during the latest reported week, with the balance of the fall largely reflecting revaluation effects. Market estimates suggest the central bank may have net sold about $30 billion in foreign exchange during September alone.
Buffers still comfortable
Despite the sharp four-week slide, RBI Governor Sanjay Malhotra said earlier this week that India retains import cover of about 11 months and reserves equivalent to 94.4 per cent of its external debt. The concessional foreign exchange swap window, which opened on June 8 and closed on August 31, had helped mobilise $143.6 billion in foreign currency inflows by September 18, contributing significantly to the earlier build-up.
Sources:
- Business Standard: India's forex reserves drop for fourth week, down $12.95 bn to $734.6 bn
- The Tribune: India's forex reserves fall by $12.95 billion to $734.61 billion (ANI)
