India’s forex reserves halts 2-week losing streak, jumps by $4 billion to $598 billion

In the previous reporting week, the overall reserves had dropped by $30 million to $594.858 billion. Notably in October 2021, the country’s forex kitty had reached an all-time high of $645 billion. 

The reserves took a hit as the central bank deployed the kitty to defend the rupee amid pressures caused majorly by global developments since last year. For the week ended September 1, the foreign currency assets, a major component of the reserves, increased by $3.442 billion to $530.691 billion, according to the Weekly Statistical Supplement released by the RBI.

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 were up by $584 million to $44.939 billion, according to the central bank’s data. The Special Drawing Rights (SDRs) were up by $1 million to $18.195 billion, as per RBI data.

The country’s reserve position with the IMF was also up by $12 million to $5.073 billion in the reporting week, according to the data. 

The central bank intervenes in the spot and forwards markets to prevent runaway moves in the rupee. The changes in foreign currency assets, expressed in dollar terms, include the effects of appreciation or depreciation of other currencies held in the RBI’s reserves.

 For the week the forex reserves data pertains, the rupee fell marginally against the dollar and traded in a range of 82.5225 to 82.8075. The rupee ended at 82.9450 on Friday, down 0.4 per cent this week.

Elevated crude oil prices, higher US treasury yields, and strength in the dollar index weighed on the rupee through the week but some softness on Friday offered respite. In the near term, 83.30 appears to be the lower limit for the rupee, said Anindya Banerjee, head of FX research at Kotak Securities.

Meanwhile, the US dollar headed on Friday for its longest weekly winning streak in nine years, bolstered by a resilient run of US economic data that has put the end of the Federal Reserve’s aggressive rate-increase cycle into question, according to news agency Reuters.

The US dollar index, which measures the greenback against major peers, was last 0.05 per cent lower at 105 but remained not far from the previous session’s six-month high of 105.15. The index was on track to extend its gains into an eighth straight week, and is up 0.7 per cent thus far.

With inputs from Agencies

Updated: 08 Sep 2023, 07:41 PM IST