After falling by $1.09 billion in the previous week, India’s forex reserves during the week to November 11 posted its steepest accretion since August 2021 and soared by $14.72 billion to reach $544.72 billion.
According to the latest weekly data from the Reserve Bank of India (RBI), the forex reserves swelled by $14.72 billion to $544.72 billion for the week to November 11. The reserves were at $529.99 billion as of November 4. However, the reserves have fallen by over $110 billion since March as the RBI has been propping up the rupee amid global volatility.
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 by global developments.
The foreign currency assets, which is the largest component of the reserves, rose by $11.8 billion to $482.53 billion for the reporting week. 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 increased by $2.64 billion to $39.70 billion. In the week to October 21, the reserves had fallen by $117.93 billion to $524.52 billion. The reserves had climbed by $16.7 billion in the week to August 27, 2021, but the addition included $12.6 billion of one-time COVID restructuring support from the International Monetary Fund (IMF).
A treasury head at a private sector bank told news agency PTI that the record $14.7-billion surge is due to the impact of an estimated USD 8 billion worth of recent overseas currency purchases by the RBI. The sharp jump is also driven by a softer dollar and changes in the central bank’s forward book.
According to the Reserve Bank’s weekly statistical supplement, despite the massive accretion in the reporting week, the forex kitty is still down from around USD 630 billion at the beginning of this year. The reserves peaked in September 2021 at over USD 642 billion.
The RBI has sold a portion of the reserves to prevent a sharp fall in the rupee since the Ukraine war began. The Reserve Bank has sold $10.36 billion worth of foreign currency on a net basis in September. The rupee tumbled from around 79.5 per dollar to over 81.5 in September. It plunged to a record low of 83.29 in October.
The rupee climbed 2.3 per cent between October 21 and November 11, and closed at 81.74 on Friday, down 10 paise. The rupee logged its first weekly fall in four weeks due to weakness in Asian currencies. The domestic unit declined by 96 paise or 1.18 per cent in the week to Friday.
(Inputs from PTI)
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