Forex Fluctuations: Foreign Exchange Reserves Drop $2.9 Billion to $593.19 Billion

India’s forex reserves dropped $2.901 billion to $593.198 billion in the week ended June 23, the Reserve Bank said on Friday. The overall reserves increased by $2.35 billion to $596 in the previous reporting week.

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 majorly by global developments.

For the week ended June 23, the foreign currency assets, a major component of the reserves, decreased by $2.212 billion to $525.44 billion, according to the Weekly Statistical Supplement released by the RBI on Friday.

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 dropped $745 million to $44.304 billion, the RBI said. The Special Drawing Rights (SDRs) were up by $85 million to $18.334 billion, the apex bank said.

The country’s reserve position with the IMF was down by $29 million to $5.12 billion in the reporting week, the apex bank data showed.

On Friday, the rupee declined 7 paise to end at 82.10 against the US dollar in a restricted trade on Friday, as a firm US dollar in global markets and gains in crude oil prices weighed on investor sentiments. However, a rally in the domestic equities and FII inflows into equities supported the rupee and restricted the fall.

Anil Kumar Bhansali, head (treasury) and executive director of Finrex Treasury Advisors LLP, said, “During the week, the dollar-rupee moved in a range of 13 paise during the week bringing down volatility to 2 per cent, a multi-year low. Inflows have kept rupee at highs despite the dollar buying by RBI and others and rise in dollar index and fall in Asian currencies. Though such low vols are signs of getting bought by traders but inflows are such strong that nobody is actually buying them fearing the inflows with oil companies and defence not buying the dollar to fulfil their needs.”

(With Inputs From PTI)