RBI Data
FX reserves fall below $700 bln mark, biggest decline in a week since April 2022
This story was originally published at 20:05 IST on 18 October 2024
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--India's FX reserves post biggest weekly fall since week ended Apr 1, 2022
--RBI: India Oct 11 FX reserves $690.43 bln, down $10.75 bln on week
--Das: Have no specific target for building FX reserves
--Das: On FX reserves: Can't have a repeat of 2013 like situation
--Das: On FX reserves: India can't always depend on global safety nets
--Das: Must build FX reserves at every opportunity
--Das: FX reserves now below $700 bln on revaluation
--Das: Rupee has been depreciating, we are not managing exchange rate
--Das: Depreciating pressure on rupee in last few days, stabilised now
--Das: India will meet external payment obligation whatever the situation
NEW DELHI – India's foreign exchange reserves fell below the $700 billion mark in the week ended Oct. 11. Reserves fell by $10.75 billion to $690.43 billion in the reported week, according to data released by the central bank on Friday. This is the biggest weekly fall in reserves since Apr. 1, 2022. Foreign currency assets also fell by $10.54 billion to $602.10 billion as of Oct. 11.
"The figure has come below $700 billion, mainly due to the revaluations, some amount of revaluations in the currency, securities etc. We will again go back to $700 bln. So we have no such targets. Whenever there is an opportunity, we are building reserves," Reserve Bank of India Governor Shaktikanta Das said on Friday at an event hosted by Bloomberg.
Market participants said the fall in reserves was primarily due to the RBI's active intervention through dollar sales in the domestic spot market and revaluation losses after a jump in US Treasury yields and the US dollar during the period.
The dollar index strengthened almost 0.4% in the week ended Oct. 11, while US Treasury yields rose 14 basis points. Calculated in dollar terms, the foreign currency reserves also reflect the impact of appreciation or depreciation of non-US units like the euro, pound and yen held in the reserves.
"The RBI was protecting the 84 (a dollar) figure during this time. That is why the reserves have come down," a currency dealer at a private bank said. After a lot of resistance by the RBI, the Indian currency fell below the psychologically-crucial mark of 84-per-dollar on Oct. 11.
Das acknowledged that there is currently some pressure on the rupee, but it is not very volatile and seems to have again stabilised. "We are not managing the exchange rate, the rupee is depreciating vis-a-vis the dollar. We buy the dollars whenever there is an opportunity, and we supply when there is a shortage of dollars in the market," Das said.
The governor emphasised that India cannot have a repeat of the 2013 taper tantrum-like situation, which led to huge volatility in the foreign exchange market and capital outflows. "India is growing, the size of the economy is growing. We cannot always depend on global safety nets. In today's world, each country has to build its own safety net," he said.
Das said India must build its own capacity to withstand the volatility in capital flows. "If forex is coming, when the cycle reverses, it can go out in equal size and speed. We should be prepared to deal with that kind of situation, where capital flow causes a problem," he said. Das said international investors have greater confidence that, whatever the requirements, India will be able to meet its external payment obligations. End
US$1 = INR 84.07
Reported by Pratiksha
Edited by Saji George Titus
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