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Foreign exchange reserves fall to $525 billion, lowest since July 2020

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The Reserve Bank of India’s (RBI’s) reserves declined $3.8 billion to $524.52 billion in the week ended October 21, the latest data showed. The current level of reserves is the lowest since July 24, 2020.


The decline in reserves is largely on account of a drop in the RBI’s foreign assets, which fell $3.6 billion to $465.08 billion in the week ended October 21.


According to analysts, the drop in reserves in the previous week was largely attributable to the RBI’s intervention in the market to support rupee.


“It was the week in which the rupee touched a record low of 83.29 a dollar following weakness in the Asian currencies,” HDFC Securities research analyst Dilip Parmar said.


In the week ended October 21, the rupee depreciated 0.4 per cent versus the . The index, which measures the US against six major currencies, strengthened 0.6 per cent over the same period.


Foreign exchange reserves fall to $525 billion, lowest since July 2020


So far in 2022, the Indian currency has weakened 9.9 per cent against the .


The RBI’s reserves have declined by more than $100 billion since Russia invaded Ukraine in late February. As on February 25, the reserves were at $631.53 billion.


Last month, Governor had said 67 per cent of the fall in reserves so far in the current fiscal year was due to revaluation in the face of a stronger dollar.


The latest data showed that the had net sold $4.2 billion in the market in August, following sales of $19 billion in July. The had net sold $3.7 billion in the market in June. In April, the had net bought $1.9 billion in the currency market, followed by purchases of $2.0 billion in May.


The current level of reserves represents an import cover of close to nine months. The level of reserves in September 2021 accounted for almost 15 months of imports.

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