Breaking News

Forex Reserves Fall For Fifth Straight Week; By Nearly .5 Billion


<!–

–>

India’s forex reserves dip by $2.47 billion

Foreign exchange reserves fell for the fifth consecutive week as the dollar reigns supreme on expectations of an aggressive US Federal Reserve monetary policy tightening path, even as the Reserve Bank of India shifts focus toward inflation and away from growth.

Indeed, India’s FX reserves fell by $2.47 billion in the week that ended on April 8, taking the total to $600.004 billion, according to the central bank data.

That suggests the RBI has intervened to stem the rupee’s weakness. What has not helped the reserves is the capital outflows when global energy prices have risen sharply to above $100 a barrel, a fallout of the Russia-Ukraine war.

The rise in global crude prices has pushed the country’s import bill because India depends on imports for almost 85 per cent of its oil needs, and the dollar strength at the same time has hurt the country’s external balances and the currency severely.

The latest dip in forex reserves marks the fifth straight fall, with a total of near $30 billion loss. That comes after FX reserves declined at the steepest weekly rate of $11.17 billion in the prior reporting week.

The decline in reserves has also been sharp, a near $40 billion, or over a 6 per cent decline from a record high of $642.453 billion on September 3, 2021.

While India’s $600 billion forex reserves are sufficient to fund the country’s import bills for the next 12 months at least, the import cover has fallen by nearly a third since last year in March.

But the RBI is convinced it can manage the reserves, and with its focus shifting to fighting a surge in inflation, it should help the exchange rate dynamic somewhat at least.



Source link

Leave a Reply

Your email address will not be published.