India’s forex reserves at 5-month low, drops for 5th straight week by $2.17 billion to $584.74 billion: RBI data

India’s foreign exchange (forex) reserves dropped for the fifth straight week by a further $2.166 billion to $584.742 billion for the week ended October 6 – the lowest in more than five months, according to data by the Reserve Bank of India (RBI). India’s forex kitty had gone down by $3.794 billion to $586.908 billion in the previous week.

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 October 6, the foreign currency assets, a major component of the reserves, decreased by $707 million to $519.529 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.

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Gold reserves were down by a sharp $1.425 billion to $42.306 billion, said the RBI. The Special Drawing Rights (SDRs) were down by $15 million to $17.923 billion, the RBI added.

Foreign exchange reserves include India’s Reserve Tranche position in the International Monetary Fund (IMF). India’s reserve position with the IMF was also down by $19 million to $4.983 billion in the reporting week, the central bank data showed.

Also Read: Rupee ends 2 paise lower at 83.26 against US dollar; falls for third straight week

For the week the forex reserves data pertains, the rupee had fallen 0.1 per cent against the dollar and traded in the 83.1650-83.2650 range. The rupee ended at 83.2625 on Friday, down for a third consecutive week. The dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.07 per cent lower at 106.52.

“USDINR spot closed 2 paise higher at 83.26, due to demand from importers. We suspect RBI remains a major seller of the pair and because of that USDINR has not been able to breach 83.29 levels on spot. Over the near term we expect a range of 83.00 and 83.60 on spot,” said Anindya Banerjee, VP – Currency Derivatives & Interest Rate Derivatives at Kotak Securities.