The BRICS TimesExperts suggest the decline in forex reserves mainly stems from fluctuations in other major currencies against the dollar. The Reserve Bank of India’s (RBI) intervention also contributed to this drop.
India’s foreign exchange reserves saw a sharp decline. They fell by a large $6.92 billion in the week ending October 24. This brought the total reserves down to $695.35 billion. The Reserve Bank of India (RBI) confirmed this information on Friday. The previous week had seen the forex reserves hit an all-time high. Reserves had increased by $4.49 billion, reaching $702.28 billion.
Where Did the Fall Come From?
The biggest component of the forex reserves is Foreign Currency Assets (FCA). FCA declined by $3.86 billion. This brought its total value to $566.54 billion. These assets include the effect of valuation changes. Such changes occur in non-dollar currencies like the Euro, Pound, and Yen. Gold reserves also decreased during the review week. They fell by $3.01 billion to $105.536 billion. Special Drawing Rights (SDR) also saw a drop of $58 million. SDRs now stand at $18.66 billion.
However, India’s reserve position in the International Monetary Fund (IMF) slightly increased. It grew by $6 million. The IMF reserves are now at $4.608 billion. Experts believe the fall in forex reserves is due to two main factors. Currency fluctuations against the dollar played a major role. RBI’s active market intervention was the other key reason.
Rupee Stable at 88.69 Against the Dollar
The Indian rupee closed steady at 88.69 (provisional) per US dollar on Friday. This stability followed minor fluctuations throughout the day. Key reasons were weakness in domestic stock markets. The strengthening of the US currency also played a part. The rupee opened at 88.60 per dollar in the interbank forex market. It touched a high of 88.59 and a low of 88.78. It finally settled at its previous closing level of 88.69 per dollar. The rupee had dropped 47 paise to this same level on Thursday.
The Dollar Index reflects the dollar’s status versus six major currencies. It saw a slight gain of 0.04 percent. This pushed the index up to 99.39. Domestic stock markets also showed weakness. The Sensex dropped 465.75 points to close at 83,938.71. The Nifty fell 155.75 points to 25,722.10. Brent crude, the global oil benchmark, also decreased. It fell 0.68 percent to $64.56 per barrel. Furthermore, foreign institutional investors (FII) were net sellers on Thursday. They sold shares worth a net of ₹3,077.59 crore.
