India’s forex reserves hit a new low: For the week ending October 14, India’s foreign exchange reserves (Forex Reserves) further declined to a level not seen in more than two years as the country’s central bank, Reserve Bank of India (RBI) continued to defend the rupee’s decline while disregarding the serious threat posed by dwindling foreign exchange reserves.
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India’s forex reserves hit a new low: Key Points
- According to information made public by the Reserve Bank of India, the third largest economy in Asia’s foreign exchange reserves decreased by $3.85 billion to $524.52 billion for the week ending October 21.
- The spot foreign exchange reserves have decreased from their peak of $642.45 billion on September 3 of last year, which set a record, and from a low of $607 billion at the end of March.
- The currency reserves have now run out for 11 of the last 12 weeks. For the week ending October 7, when increases in gold reserves had increased the forex reserves by merely $204 million, it was the only time it was fortunate.
- For the week ending October 14, foreign exchange reserves were at $528.37 billion, its lowest level since July 2020.
RBI forced to spend $118 billion to defend INR:
- According to the Weekly Statistical Supplement published by RBI, the decrease in foreign currency reserves can be linked to a decrease in Foreign Currency Assets (FCA), a significant portion of the total reserves.
- When expressed in dollar terms, FCA is the result of the appreciation or depreciation of non-US currencies held in foreign exchange reserves, such as the euro, pound, and yen.
- The rupee dropped for a sixth consecutive week during the week ending October 21, reaching an all-time low and surpassing the 83 per dollar mark. It decreased 0.4% for the week and closed last Friday at 82.6750. It decreased by around 4% over the past six weeks, ending on October 21.
- Rupee closing price increased from its previous record low to 82.474.
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