Forex reserves decline by $6.05 billion after three-consecutive weekly rises, now at $593.48 billion

India’s forex reserves pulled back from their near one-year high to decline by $6.052 billion in the week that ended on May 19, 2023. The decline comes after three consecutive weekly increases in reserves. All components of foreign exchange reserves have witnessed a drop with foreign currency assets (FCA) impacting the most, as per the latest data of RBI.

RBI’s weekly statistical data showed that India’s total reserves were at $593.477 billion in the week that ended on May 19, 2023, down by $6.052 billion.

In the previous week that ended on May 12, 2023, forex reserves had climbed by $3.553 billion. During this week, reserves inched closer to the $600 billion mark, by recording $599.53 billion. Prior to May 12 week, the reserves jumped by $7.196 billion. Notably, in the first week of May which ended on 5th, the reserves had jumped by $4.532 billion.

Moving ahead, in the latest week (May 19, 2023, weekly performance), FCA which is the biggest component in forex, dipped by $4.654 billion to $524.945 billion. In the previous week, FCA surged by $3.577 billion.

In the week under review, gold reserves plunged by $1.227 billion to $45.127 billion, while SDRs contracted by $137 million to $18.276 billion. And lastly, the reserve position in the IMF, slipped by $35 million to $5.130 billion

India’s forex reserves were at an all-time high of $645 billion in October 2021. Meanwhile, India’s foreign exchange reserves were placed at $ 578.4 billion as on March 31, 2023.

To cushion rupee depreciation, RBI has been intervening in the forex market via both spot and forward positions.

On Friday, the Indian rupee halted its two-weeks losing streak to end at 82.5750 per dollar, slightly up by 0.2%. During the current week (ending on May 26th), the rupee recovered from its three-month low of 82.85, however, the local unit closed the trading week on a flat note.

On the latest rupee performance, Jateen Trivedi, VP Research Analyst at LKP Securities said, «Rupee traded in a small range between 82.73-82.60 with rupee showing strength on the back of strong buying in capital markets in the past two days. along with weakness in Crude price in the last 24hrs which has taken a selling from 74.00$ to 71.50$ at one point in WTI Crude.»

Going ahead, Trivedi added, «the Rupee trend can continue on a positive note if the US debt ceiling barrier is raised higher in coming days which will fuel strong selling in US dollar and all other assets will see cover. On the flip side, any further hints on delay in raising debt will play positive for the dollar and weakness for the rupee. Rupee strength can be seen towards 82.50 in next few sessions.»

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Updated: 26 May 2023, 07:33 PM IST

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