Foreign currency assets, which constitute the largest component of the reserves, drop $4.07 billion to $546.52 billion during the week under review
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India’s forex reserves declined $5.24 billion to $617.23 billion for the week ended February 9, according to the latest RBI data. The forex kitty stood at $622.5 billion for the week ended February 2.
The reserves had peaked in October 2021, when kitty had reached USD 645 billion. The reserves took a hit as the central bank sold dollars to defend the rupee amid pressures caused majorly by global developments since last year. As a result, the rupee has been the best Asian currency so far this fiscal.
In the current financial year 2023-24, the forex reserves have increased $50.28 billion, the RBI data showed.
The sharp fall in the overall reserves during the week ended February 9 was due to a sharp decline in foreign currency assets, which are the single largest component of the reserves.
Foreign currency assets, which constitute the largest component of the reserves, dropped $4.07 billion to $546.52 billion during the week under review, as per the latest data.
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Expressed in dollar terms, the foreign currency assets include the effect of appreciation or depreciation of non-US units like the euro, pound, and the yen held in the foreign exchange reserves.
The country’s reserve position with the IMF also declined $28 million to $48.32 billion in the reporting week.
The Rupee
The Indian rupees is expected to move between 82.80 to 83.10 in the coming week again with inflows dominating and RBI in all probability buying the dollars to shore up reserves and stop any major appreciation for the rupee, said Anil Kumar Bhansali, head of treasury and executive director of Finrex Treasury Advisors LLP.
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“While exporters should keep selling all upticks above 83.00, importers should buy the dips towards 82.80. Importers should hedge for near term while exporters may sell for 3 months and above, he said.
