India’s forex reserves fall for third straight week, at 4-month low of $590.70 billion

India’s foreign exchange reserves declined to $590.70 billion as of September 22, marking a four-month low, as per the data released by the Reserve Bank of India (RBI) on September 29. The fresh decrease also marked the third straight week of the fall in the country’s forex reserves.

The decrease was of $2.3 billion as against the previous week, whereas, the combined quantum of fall was of $5.9 billion in prior two weeks.

The foreign currency assets, in the week ending September 22, declined by $2.6 billion to $523.36 billion.

According to analysts, the Reserve Bank of India (RBI) is considered to have been selling dollars via public sector banks to prevent the rupee from falling to a record low.

The central bank intervenes in such scenarios and forwards markets to prevent runaway moves in the rupee.

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Apart from the RBI’s intervention, changes in foreign currency assets, expressed in dollar terms, include the effects of appreciation or depreciation of other currencies held in the central bank’s reserves.

Foreign exchange reserves include India’s Reserve Tranche position in the International Monetary Fund.

For the week the forex reserves data pertains, the rupee had risen 0.2 percent against the dollar and traded in a range of 82.8225 and 83.2725.

Meanwhile, the rupee appreciated 14 paise to settle at 83.05 (provisional) against the US dollar on September 29, boosted by a firm trend in equity markets and a sharp correction in the greenback against major rivals overseas. However, selling pressure from foreign equity investors and rising crude oil prices in international markets weighed on the domestic unit, forex traders said.

“Indian rupee strengthened on Friday on weak US dollar index and a decline in crude oil prices. Positive tone in domestic markets also strengthened the rupee. However, FII outflows capped sharp gains,” news agency PTI quoted Anuj Choudhary, Research Analyst at Sharekhan by BNP Paribas, as saying.

(With agency inputs)