After witnessing the biggest jump in over a year in the previous week, India’s forex reserves dropped $1.09 billion during the week ended November 4 to $529.99 billion due to a sharp decline in the gold reserves. In the previous week ended October 28, the reserves had swelled by $6.56 billion to reach $531.08 billion, making it the biggest weekly jump in a year.
In October 2021, the country’s forex kitty had reached an all-time high of $645 billion. The reserves have been declining as the central bank deploys the kitty to defend the rupee amid pressures caused by global developments.
Foreign currency assets (FCA), a major component of the overall reserves, decreased by $120 million to $470.727 billion during the week to November 4, according to the Weekly Statistical Supplement released by the RBI. 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.
The gold reserves dropped by $705 million to $37.057 billion, it said. The special drawing rights (SDRs) were down by $235 million to $17.39 billion.
The country’s reserve position with the International Monetary Fund (IMF) also dipped by $27 million to $4.82 billion in the reporting week, the apex bank data showed.
The forex reserves have been falling due to the capital outflow amid recession concerns and as the RBI has spent a significant amount to shore up the rupee. The domestic currency has declined about 9 per cent during the current calendar year.
Meanwhile, the rupee, strengthening for the 5th day, on Friday appreciated by 62 paise to close at 80.78 (provisional) against the US dollar, as moderating US CPI data coupled with a fall in the dollar index boosted investor sentiments. Forex traders said positive domestic equities and sustained foreign fund inflows also supported the local unit.
At the interbank foreign exchange market, the local unit opened at 80.76 and touched an intra-day high of 80.58 and a low of 80.99 against the greenback. The local unit finally settled at 80.78, registering a rise of 62 paise over its previous close of 81.40.
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