India’s forex reserves plunge to $580 billion; lowest level in 15 months
According to RBI data, the nation’s foreign exchange reserves decreased significantly by a whopping USD 8.062 billion to USD 580.252 billion in the week ending July 8.
The reserves decreased by USD 5.008 billion to USD 588.314 billion during the week that ended July 1.
According to the RBI, the decline in reserves for the reporting week that concluded on July 8 was caused by a decline in both gold reserves and foreign currency assets (FCA), a significant portion of total reserves.
In the reporting week, FCA decreased by USD 6.656 billion to USD 518.089 billion, according to the Reserve Bank of India’s Weekly Statistical Supplement, which was published on Friday.
When expressed in dollar terms, FCA takes into account the impact of appreciation or depreciation of non-US currencies held in foreign exchange reserves, such as the euro, pound, and yen. Gold reserves decreased by USD 1.236 billion to reach USD 39.186 billion.
The Special Drawing Rights (SDRs) held by the International Monetary Fund (IMF) decreased by USD 122 million to USD 18.012 billion for the reporting week that concluded on July 8. The data showed that during the reporting week, the nation’s reserve position with the IMF fell by USD 49 million to USD 4.966 billion.
The rupee has been rapidly losing value for a considerable amount of time. This is due to the increased dangers of a global recession, reluctance to high-risk investments, and ongoing foreign capital outflows.
The value of the dollar has increased in relation to all significant world currencies, reaching multi-year highs in relation to the euro, pound, and yen. The strong hawkish posture of the central bank and the possibility of a worldwide recession are projected to lead to an increase in the dollar index this month.
Supply chain disruptions brought on by sanctions imposed on Russia following its invasion of Ukraine have kept commodities prices high and caused major energy shortages in Europe.
Nearly 85% of India’s crude oil needs are imported, and rising oil prices pose a threat to worsen the trade deficit and exacerbate the rupee’s problems.