India’s foreign exchange reserves jumped $708 million to $602.161 billion for the week ended August 11, the Reserve Bank of India (RBI) said on Friday. This is the first increase in the kitty after declining for three consecutive weeks. In the previous reporting week, the overall reserves had declined $2.417 billion to $601.453 billion.
In October 2021, the country’s foreign exchange reserves touched an all-time high of $645 billion. The reserves took a hit as the central bank deployed the kitty to defend the rupee amid pressures caused majorly by global developments since last year.
For the week ended August 11, the foreign currency assets, a major component of the reserves, increased $999 million to $534.399 billion, according to the Weekly Statistical Supplement released by the RBI. Expressed in dollar terms, the foreign currency assets include the effect of appreciation or depreciation of non-US units like the euro, pound and yen held in the foreign exchange reserves.
Gold reserves were down $340 million to $44.34 billion, the RBI said. The special drawing rights (SDRs) were up $51 million to $18.324 billion.
The country’s reserve position with the IMF was down $2 million to $5.098 billion in the reporting week, as per the apex bank data.
Meanwhile, the rupee on Friday edged lower by 1 paisa to settle at an all-time low of 83.10 against the US dollar, weighed down by a negative trend in domestic equities and foreign fund outflows. Forex traders said the rupee is likely to trade with a negative bias on risk aversion in global markets and a rising US dollar.
At the interbank foreign exchange, the domestic unit opened at 83.03 against the dollar and moved in a range of 83.02 to 83.13 in the day trade. It finally ended the day at 83.10, registering a fall of 1 paisa from its previous close. On Thursday, the rupee settled lower by 1 paisa at a record low of 83.09 against the US dollar.
Anil Kumar Bhansali, head of (treasury) and executive director of Finrex Treasury Advisors LLP, said, “The main reason for the falling rupee has been the interest differential between Yuan and the dollar falling, as China cuts interest rates while the US increases it. This has kept the Yuan weak and thus affecting the other Asian currencies including the rupee as nobody wants a strong currency to keep exports competitive.”
He added that next week, the rupee is expected to remain in the range of 82.90 to 83.50, broadly towards weakness.
(With Inputs From PTI)
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