Forex Update: India’s Foreign Exchange Reserves Decline $3.1 Billion To $603.9 Billion

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Gold reserves were down by $710 million to $44.904 billion; special drawing rights were down by $29 million to $18.444 billion

India’s forex reserves declined $3.165 billion to $603.87 billion for the week ended July 28, according to the latest RBI data. This is the second consecutive weekly drop in the reserves after the $1.987 billion decline to $607.035 billion in the previous reporting week.

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In October 2021, the country’s forex kitty reached an all-time high of USD 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 July 28, the foreign currency assets, a major component of the reserves, decreased by USD 2.416 billion to USD 535.337 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 USD 710 million to USD 44.904 billion, the RBI said. The Special Drawing Rights (SDRs) were down by USD 29 million to USD 18.444 billion, the apex bank said.

The country’s reserve position with the IMF was down by USD 11 million to USD 5.185 billion in the reporting week, the apex bank data showed.

Meanwhile, the rupee fell by 7 paise to settle at a more than two-month low against the US dollar on Friday weighed down by safe-haven dollar demand and higher crude oil prices.

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Anil Kumar Bhansali, head (treasury) and executive director of Finrex Treasury Advisors LLP, said, “The rupee is expected to remain in the range of 82.60 to 82.95 in the coming week as $ bullish sentiments continue, while we expect RBI to protect the upside of USD INR not going beyond 82.95. The stop loss to this view is 82.98.”