Reserve Bank of India’s (RBI’s) foreign exchange reserves declined by $5.7 billion to an 11-week low of $561.27 billion in the week ended February 17, latest central bank data showed.
This is the third week in a row when forex reserves have shown a dip. Last week, they had fallen by $8.319 billion to $566.948 billion.
In October 2021, the country’s forex reserves had reached an all-time high of $645 billion. The reserves have been declining as the central bank has been using them to meet the wide gap increase of trade defecit
The RBI’s gold reserves also declined last week, dropping $1 billion to $41.82 billion, the data showed.
In the week gone by, the rupee depreciated 0.4 per cent against the US dollar, settling at 82.83 per US dollar on February 17.
“The decline in non-dollar assets and the central bank’s intervention to match the dollar demand pushed the forex reserves lower for another week. Some corporate dollar outflows for debt repayment were seen during that week,” HDFC Securities research analyst Dilip Parmar said.
Following sharp increases in November and December, the RBI’s reserves have been declining for the past few weeks, largely in line with renewed concerns over rate hikes by the Federal Reserve and a resultant rise in the US dollar globally.
Reserves worth $576.8 billion as on January 27 cover 9.4 months of projected imports for the current fiscal year, the RBI staff said in the central bank’s February Bulletin.
The rupee has depreciated 9.7 per cent against the US dollar over a year and with the RBI stemming the rupee’s weakness through dollar sales, its reserves have dropped to their lowest levels since October, 2020. The fall in reserves has widespread implications in the days to come
