India's forex reserves plunge to $580 billion; lowest level in 15 months
During the reporting week ended July 8, the decrease in the reserves was on account of a fall in the Foreign Currency Assets (FCA), a major component of the overall reserves, and in the gold reserves, RBI said
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New Delhi: The country’s foreign exchange reserves declined by a massive USD 8.062 billion to USD 580.252 billion in the week ended July 8, according to RBI data. In the previous week ended July 1, the reserves had dropped by USD 5.008 billion to USD 588.314 billion.
During the reporting week ended July 8, the decrease in the reserves was on account of a fall in the Foreign Currency Assets (FCA), a major component of the overall reserves, and in the gold reserves, RBI said.
FCA was down by USD 6.656 billion to USD 518.089 billion in the reporting week, according to the Reserve Bank of India’s Weekly Statistical Supplement released on Friday.
Expressed in dollar terms, FCA includes the effect of appreciation or depreciation of non-US units like the euro, pound and yen held in the foreign exchange reserves. Gold reserves fell by USD 1.236 billion to USD 39.186 billion.
In the reporting week ended July 8, the Special Drawing Rights (SDRs) with the International Monetary Fund (IMF) dropped by USD 122 million to USD 18.012 billion. The country’s reserve position with IMF decreased by USD 49 million to USD 4.966 billion in the reporting week, the data showed.
The rupee has been on a weakening spree for quite some time, with heightened global recession risks, high-risk aversion, and persistent foreign outflows.
The dollar has appreciated against all major global currencies, reaching its multi-year highs against the euro, pound and yen. The dollar index is expected to appreciate this month amid the central bank’s firm hawkish stance and risks of a global recession.
Disruptions in supply chains due to sanctions on Russia after its invasion of Ukraine have led to severe energy shortages in Europe and kept commodity prices elevated.
India imports nearly 85 percent of its crude oil requirements and high oil prices threaten to widen the country’s trade gap, further accentuating the rupee’s woes.
(with inputs from agencies)
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