India’s forex reserves decline by $2.47 billion
Forex reserves fell for the fifth consecutive week as the dollar reigns supreme on expectations of a tightening of monetary policy from the US Federal Reserve, even as the Reserve Bank of India shifts focus towards inflation and away from growth.
In fact, according to central bank data, India’s foreign exchange reserves fell by $2.47 billion for the week ended April 8, taking the total to $600.004 billion.
This shows that RBI has intervened to contain the weakness of the rupee. What hasn’t helped reserves is capital outflows, the result of the Russo-Ukraine war, when global energy prices have risen sharply above $100 a barrel.
Rise in global crude oil prices has pushed up the country’s import bill as India is dependent on imports for nearly 85 per cent of its oil needs, and the strengthening of the dollar has seriously hurt the country’s external balance and currency. has delivered.
The latest fall in forex reserves is the fifth consecutive fall with a total loss of $30 billion. This comes after forex reserves fell at the sharpest weekly rate of $11.17 billion in the previous reporting week.
There has also been a sharp decline in reserves, which stands at around $40 billion, or a decline of more than 6 percent from a record high of $642.453 billion on September 3, 2021.
While India’s foreign exchange reserves of $600 billion are sufficient to meet the country’s import bills for at least the next 12 months, the import cover has declined by almost a third since March last year.
But the RBI is confident it can manage the reserves, and with its focus on fighting the rise in inflation, it should help make the exchange rate at least as dynamic.