Home Nepal stock India’s foreign exchange reserves fall for the sixth consecutive week

India’s foreign exchange reserves fall for the sixth consecutive week

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New Delhi: For the past six weeks, India’s foreign exchange reserves have been continuously facing a fall. According to the latest RBI data, reserves fell further by $311 million in the week to April 15 to $603.694 billion.

Foreign exchange reserves fell by $2.471 billion in the previous reporting week which ended April 8.

India‘s foreign exchange reserves are under pressure. This comes amid the surge in the US dollar against major currencies in recent weeks, amid the Fed’s aggressive stance on tightening monetary policy to curb soaring inflation.

The world is fighting inflation. As Russia and Ukraine battle it out, the war has further distorted supply chains that were already disrupted by the pandemic. The dollar index, which measures the performance of the greenback against a basket of six currencies, hit a two-year high this week, breaking through the 100 level and hitting more than two decades against the yen on market momentum. interest rate.

This interest rate differential strengthened the dollar and weighed on foreign exchange reserves, with Sri Lanka and Nepal being prime examples of these spillovers.

India was not spared. Even if its import cover remains significant at more than 600 billion dollars, despite the decline in its foreign exchange reserves for the sixth consecutive week. Besides the rising dollar, high global crude oil prices and ongoing capital outflows from the Indian stock market have weighed on the local currency, reducing foreign exchange reserves.

The RBI’s weekly report cites that the fall in the foreign exchange reserve is due to a decline in foreign currency holdings (FCA) – a major component of overall reserves.

FCAs are expressed in dollars. These FCAs include the effect of the appreciation or depreciation of non-US units such as the euro, pound and yen held in foreign exchange reserves. They fell from $877 million to $536.768 billion.

Gold reserves increased by $877 million to $536.768 billion. Special Drawing Rights (SDRs) with the International Monetary Fund (IMF) fell by $44 million to $18.694 billion.

According to RBI data, India’s reserve position with the IMF fell by $16 million to $5.086 billion in the reporting week.