Forex Update: India's Foreign Exchange Reserves Hit 5-Month Low, Fall $2.1 Billion To $584.7 Billion

Falling for the fifth consecutive week, India’s foreign exchange (forex) reserves hit its five-month low of $584.74 billion as of October 6, according to the latest RBI data. During the week ended October 6, India’s forex reserves dropped by $2.166 billion.

The country’s forex kitty had gone down by $3.794 billion to $586.908 billion in the previous week.

It can be noted that in October 2021, the country’s forex kitty had reached an all-time high of $645 billion. The reserves took a hit as the central bank deployed the kitty to defend the rupee amid pressures caused majorly by global developments since last year.

For the week ended October 6, the foreign currency assets, a major component of the reserves, decreased by $707 million to $519.529 billion, 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.

Gold reserves were down by a sharp $1.425 billion to $42.306 billion, the Reserve Bank of India said. The special drawing rights (SDRs) were down by $15 million to $17.923 billion, the apex bank added.

India’s reserve position with the IMF was also down by $19 million to $4.983 billion in the reporting week, the central bank data showed.

The RBI intervenes in the spot and forwards markets to prevent runaway moves in the rupee. The RBI’s stranglehold on the rupee via its persistent forex market intervention has kept volatility in the Indian unit low over the last few sessions.

(With Inputs From Agencies)