India’s foreign exchange reserves have declined for a third consecutive week, reaching a four-month low of $590.70 billion as of September 22, according to data from the Reserve Bank of India (RBI). This marks a decrease of $2.3 billion from the previous week, following a total drop of $5.9 billion in the preceding two weeks. The RBI has been selling dollars through public sector banks to prevent the rupee from hitting a record low against the dollar. Fluctuations in foreign currency assets, including the appreciation or depreciation of other currencies held in the RBI’s reserves, also contribute to the changes in the forex reserves.
The decline in India’s foreign exchange reserves highlights the pressure on the country’s currency. The RBI has been actively intervening in the spot and forwards markets to stabilize the rupee and prevent excessive depreciation against the dollar. This is in line with the central bank’s efforts to maintain stability in the foreign exchange market and ensure the competitiveness of the Indian rupee. The decrease in reserves can also be attributed to fluctuations in the value of other currencies held in the RBI’s reserves, indicating the impact of global currency movements on India’s forex reserves.
While the rupee has shown a slight increase of 0.2% against the dollar during the week for which the forex reserves data pertains, it ultimately ended the week at 83.04, down 0.1%. The RBI’s intervention and ongoing market monitoring are essential to prevent further depreciation and maintain stability in the foreign exchange market. These efforts are crucial for promoting investor confidence and ensuring the smooth functioning of India’s economy.