India’s foreign exchange reserves declined for the sixth consecutive week, touching a 10-month low of $625.9 billion for the week ended January 10, according to data released by the Reserve Bank of India (RBI).
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The reserves fell by $8.7 billion during the period, marking the steepest weekly decline in two months, Reuters said.
The fall was driven primarily by a $9.5-billion drop in foreign currency assets, while the value of gold reserves rose by $792 million. The reserves have now declined by nearly $80 billion since reaching an all-time high of $705 billion at the end of September last year.
The depreciation of the Indian rupee has been a key factor behind the dwindling reserves, with the central bank intervening in the forex market to manage volatility. The rupee, which has faced sustained headwinds from a strong US dollar and weak capital inflows, has depreciated 3.2% since October 1.
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On Friday (January 17), the rupee fell by 6 paise against the dollar to close at 86.61/$, registering a weekly decline of 0.74%. This marks the currency’s steepest weekly drop in 18 months and its 10th consecutive weekly loss, Reuters added.
Analysts noted that the RBI has been cautious in deploying reserves to contain undue currency volatility amid strong global challenges. The forex reserves also include India’s reserve tranche position in the International Monetary Fund (IMF).
(Edited by : Shoma Bhattacharjee)
