MUMBAI: India’s foreign exchange reserves dropped for an eighth consecutive week and stood at a five-month low of $656.58 billion as of Nov. 22, data from the Reserve Bank of India (RBI) showed on Friday.
The reserves fell by $1.3 billion in the reporting week.
They have dropped by $47 billion cumulatively in the last seven weeks.
“The decline in reserves last week was led by the RBI selling dollars on a net basis in the spot market, which was countered by revaluation gains,” said Gaura Sen Gupta, India economist at IDFC First Bank.
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 prevent undue volatility in the rupee.
The central bank has frequently intervened in recent sessions to support the rupee near the psychologically important support level of 84.50, as per traders.
India’s forex reserves see sharpest weekly drop on record, hit over four-month low
The rupee had weakened to its record low of 84.5075 last week due to outflows from local stocks, which were dragged by a slump in Adani group shares, while uncertainty about the Federal Reserve’s path to lowering policy rates also weighed.
The local currency ended flat at 84.4825 on Friday, but fell by nearly 0.5% in November, the steepest decline since March.
The forex reserves also include India’s reserve tranche position in the International Monetary Fund.
Foreign exchange reserves (in million US dollars)-------------------------------------------------- Nov 22 Nov 15 2024 2024--------------------------------------------------Foreign currency assets 566,791 569,835Gold 67,573 65,746SDRs 17,985 18,064Reserve Tranche Position 4,232 4,247--------------------------------------------------Total 656,582 657,892--------------------------------------------------