Forex Update: India’s Foreign Exchange Reserves Fall $2.28 Billion to $640.33 Billion, 2nd Consecutive Drop

India’s forex reserves declined $2.282 billion to $640.334 billion during the week ended April 19, according to the latest RBI data. This is the second consecutive week of fall in the kitty.

In the previous week, the country’s forex reserves had dropped by $5.401 billion to $643.162 billion, which snapped a multi-week trend of an increase.

India’s overall foreign exchange reserves touched an all-time high of $648.562 billion for the week ended April 5. In September 2021 also, the country’s forex kitty had reached a high of $642.453 billion, which was breached in March this year.

The reserves took a hit as the central bank deployed the kitty to defend the rupee amid pressures caused majorly by global events, but there had been a steady accretion over the past few months.

For the week ended April 19, the foreign currency assets, a major component of the reserves, decreased $3.793 billion to $560.86 billion, according to the RBI’s latest data.

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 continued to rise and increased $1.01 billion to $56.808 billion during seven days ended April 19. The special drawing rights (SDRs) were down $43 million to $18.034 billion, the RBI said.

India’s reserve position with the International Monetary Fund (IMF) was also down $2 million to $4.631 billion in the reporting week, according to the data.

The Rupee During Week Ended April 26

The Indian rupee held on to its own in the week as it gained from a low of 83.45 to 83.26 closing at 83.34 with Vodafone Idea inflows and outflows both hitting it while REC and other corporates bringing in dollars, which allowed the rupee to gain to 83.26, said Anil Kumar Bhansali, head (treasury) and executive director of Finrex Treasury Advisors LLP.

“In the coming week expect rupee to remain in the range between 83.20 to 83.50 with RBI standing in the path of depreciation beyond 83.50 and buyers and sellers in between the range. The market will be acting on cues from today’s inflation data as well as the FED meeting and PMI data next week,” he added.