India's foreign exchange reserves fell by $2.23 billion to $550.87 billion for the week ending Sep 9, according to data released today by the Reserve
The fall in the foreign exchange reserves can be attributed to a fall in the Foreign Currency Assets (FCA), which is a major component of the overall reserves, according to the Weekly Statistical Supplement released by RBI.
Foreign currency assets dropped $2.52 billion to $489.60 billion for the same period. However, gold reserves rose $340 million to $38.64 billion.
Expressed in dollar terms, FCA consists of the effect of appreciation or depreciation of non-US units like the euro, pound and yen held in the foreign exchange reserves.
India’s spot forex reserves have fallen from $607 billion in end-March.
Foreign exchange reserves could fall to $510 billion even in a worst case scenario if the current account deficit widens to 4 percent during FY’23, according to estimates by IDFC First Bank.
Deutsche Bank recently said that India’s overall foreign exchange reserves will deplete further this year due to a ballooning current account deficit and interventions by the central bank to support the rupee.
economictimes.indiatimes.com