Forex Update: India’s Reserves Drop to $643.16 Billion from $5.40 Billion

According to the most recent RBI statistics, India’s foreign currency (forex) reserves decreased by $5.401 billion to $643.162 billion in the week that ended on April 12. Overall reserves reached a record high of $648.562 billion in the preceding reporting week, up $2.88 billion.

Recall that the nation’s foreign exchange reserves hit an all-time high of $642.453 billion in September 2021, a record that was surpassed in March of this year. The reserves had been steadily building over the previous several months, but they suffered a setback when the central bank utilized the kitty to protect the rupee against pressure mostly brought on by outside events.

“Despite geopolitical headwinds and an uncertain economic environment, India’s foreign exchange reserves remain intact at $643 billion, supported by India’s attractiveness towards global investors and a strong exports growth trajectory,” stated Sanjeev Agrawal, president of the PHD Chamber of Commerce and Industry.

According to statistics issued on April 19, the foreign currency assets, which make up a significant portion of the reserves, fell by $6.513 billion to $564.653 billion for the week ending April 12.

The impact of non-US currencies like the euro, pound, and yen held in the foreign exchange reserves’ appreciation or depreciation is included in the foreign currency assets, which are expressed in terms of dollars.

Over the course of the week, gold reserves rose by $1.241 billion to $55.798 billion. According to the RBI, the value of special drawing rights (SDRs) decreased by $93 million to $18.077 billion.

According to central bank statistics, India’s reserve position with the IMF decreased by $35 million to $4.634 billion during the reporting week.

The Rupee Prospects

The RBI intervened in the local OTC (over-the-counter) and NDF markets to keep the Indian rupee close to 83.50 after it hit a new low of 83.70 in the NDF market, according to Anil Kumar Bhansali, executive director of Finrex Treasury Advisors LLP and head of Treasury.

As promised by the RBI Governor at the press conference after the most recent MPC meeting, the RBI sold about $2 billion on Thursday and made sure that the dollars it purchased were put to use during the rainy season.

The RBI sold dollars to guarantee a higher closing over the weekend, but the rupee stayed within the range and finished at the day’s high. As we wait for the global tensions to subside, the market is in a wait-and-watch state, Bhansali said.