Forex Reserves: $7.5 Billion Drop In Foreign Currency Reserves
Forex reserves: $7.5 billion drop in foreign currency reserves, a ‘side effect’ of rupee weakness.
The effect of continuous decline in the rupee (Rupee Price Fall) is beginning to be seen in the health of RBI.
The country’s foreign exchange reserves fell by USD 7.541 billion to USD 572.712 billion in the week ended July 15 due to repeated interventions by the RBI to stem the fall of the rupee.
According to data released by the RBI on Friday, foreign exchange reserves fell by $8.062 billion to $580.252 billion in the week ended July 8.
The main reason for the decline in foreign exchange reserves is the decline in foreign currency assets, which constitute a significant portion of total foreign exchange reserves.
Apart from this, the gold reserves are also low. Last week FCA decreased by 6.527 billion dollars to 511.562 billion dollars. The value of gold reserves also decreased by USD 83 crore to USD 38.356 billion.
The Special Drawing Rights held by the IMF decreased by $15.5 million to $17.857 billion.
According to data released by the RBI, stocks fell to a 20-month low after the central bank’s heavy intervention in the foreign exchange market as investors sold dollars to counter the sharp depreciation of the rupee.
In November 2020 foreign exchange reserves were 572 billion dollars. It reached a high of 642 billion in October 2021.
Forex reserves: The price of the rupee will remain volatile for now.
In the interbank forex market, the rupee closed 10 paise higher at 79.85, compared to Thursday’s close of 79.95.
The rupee strengthened despite net selling by foreign institutional investors in equity markets on Friday.
The dollar index, which measures the greenback’s strength against a basket of six currencies, was up 0.2 percent at 107.
It is being speculated that the rupee will remain under pressure against the dollar for now and if this happens, the RBI will have to come forward to stop this decline.
