India’s foreign exchange reserves fell $1.7 billion to their lowest level in more than a year during the May 6 period, a week before the rupee hit new higher historic lows, suggesting further erosion.
The fall in foreign exchange reserves in recent months is due to persistent capital outflows and the weakness of the rupee caused by the surge in the dollar.
Russia’s attack on Ukraine and the resulting Western sanctions have in turn further disrupted supply chains, leading to soaring commodity prices and runaway inflation globally.
The greenback’s rise was led by expectations of a very aggressive monetary policy from the US Federal Reserve to combat decades-high inflation and the intervention of the RBI through dollar sales. by Indian public banks to support the rupee.
In the latest data for the week ending May 6, the country’s foreign exchange reserves fell by $1.744 billion to $595.954 billion, marking the ninth consecutive week of decline and the lowest since late March 2021, according to the Reserve Bank of India weekly statistical supplement.
This data is for a week before the rupee repeatedly hit new highs.
Indeed, the rupee on May 9, Monday, closed at a record low at that time of 77.44 against the dollar. It broke above 77.50 to the dollar at various times to repeatedly breach its intraday lows.
On Thursday, the currency ended at a new all-time low of 77.50 after hitting a fresh intraday low of 77.63 against the US currency.
While the rupee rallied a bit on Friday to end at 77.31 as the RBI intervened in the open market to stem the currency’s losses, this suggests further declines in foreign exchange reserves.
Sources told The AU Times that the central bank was participating in the market to support the rupiah as the currency fell to new lows and added that the RBI would continue to do so, albeit to control “jerk moves”. ” rupee.