MUMBAI: India’s foreign exchange reserves fell by $3.2 billion to a more than five-month low of $654.86 billion as of Dec. 6, data from the Reserve Bank of India (RBI) showed on Friday.
The reserves had risen by $1.5 billion in the week of Nov. 29, after dropping by $48.3 billion in the prior eight weeks.
Changes in foreign currency assets are caused by the central bank’s intervention in the forex market as well as the appreciation or depreciation of foreign assets held in the reserves.
The RBI intervenes on both sides of the forex market to curb undue volatility in the rupee.
The week for which the forex reserves data pertains, the RBI is estimated to have net sold dollars worth $6.1 billion, while the revaluation gain is expected to be around $2.7 billion, said Gaura Sen Gupta, India economist at IDFC FIRST Bank.
India’s fx reserves halt eight-week losing streak, come off 5-month lows
Last week, the rupee declined to its then all-time low of 84.7575, hurt by weakness in the Chinese yuan and strong dollar bids in the non-deliverable forwards (NDF) market, prompting the RBI to intervene. The currency fell 0.2% last week.
The domestic unit ended at 84.7875 on Friday, down for a sixth consecutive week. It hit a record low of 84.88 earlier this week, pressured by a lingering depreciation bias and heightened demand for the U.S. dollar in the NDF market.
The forex reserves also include India’s reserve tranche position in the International Monetary Fund.
Foreign exchange reserves (in million US dollars)
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Dec 06 Nov 29
2024 2024
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Foreign currency assets 565,623 568,852
Gold 66,936 66,979
SDRs 18,031 18,007
Reserve Tranche Position 4,266 4,254
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Total 654,857 658,091
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