India’s forex reserves fell $2.39 billion to a three-month low of $560.003 billion
Bombay:
The country’s foreign exchange reserves fell $2.39 billion to a three-month low of $560.003 billion for the week ended March 10, the Reserve Bank said in its latest weekly data release.
In the week ending March 3, reserves increased by USD 1.46 billion to reach USD 562.40 billion.
On an annualized basis, according to the RBI, reserves fell $47.31 billion during the week under review, while on a fiscal year basis, reserves fell $62.23 billion.
With this erosion, the forex cat is at its lowest level since early December, according to the weekly statistical supplement released by the RBI on Friday.
The loss in reserves is due to the revaluation of foreign currency assets, which are the largest component of the forex pot, amounting to USD 2.2 billion to USD 494.86 billion for the week ended March 10 .
On a year-over-year basis, the value of foreign currency assets fell by $45.86 billion and from a fiscal year perspective they lost $59.49 billion.
In dollar terms, foreign currency assets include the effect of appreciation or depreciation of the non-US units such as the euro, pound and yen held in foreign exchange reserves.
The reserve losses are mainly due to the sale of dollars by the RBI to contain the volatility of the rupee in the spot and futures markets to prevent out-of-control movements in the exchange rate.
Last week, the rupee held firm, losing just 10 basis points against the dollar and the currency traded in the 81.61-82.29 range. The rupee closed at 82.55 on Friday.
The country’s gold reserves and SDR holdings also saw declines in the week under review, with both reserves falling by USD 110 million and USD 53 million respectively. Gold reserves and SDR holdings amount to USD 41.92 billion and USD 18.12 billion respectively.
The country’s reserve position in the IMF also fell by USD 11 million to USD 5.1 billion.
Reserves have fallen from the peak as the rupee is under pressure and the monetary authority has taken measures to protect the rupee from extreme volatility. By 2022, the cost of defending a falling rupee will exceed $115 billion of reserves.
The worst drop occurred in the week leading up to Feb. 10, when reserves collapsed by a hefty $8.32 billion to $566.95 billion.
By October 2021, the forex cat had reached an all-time high of $645 billion.
(Except for the headline, this story has not been edited by DailyExpertNews staff and is being published from a syndicated feed.)
