Forex reserves have been declining since July 29, with the exception of last week, when forex assets increased by $204 million.
RBI has said on several occasions that it will intervene in the market to contain the volatility of the rupee.
Forex reserves fell by $4.5 billion after a modest increase in the previous week. Data released by the Reserve Bank of India showed that reserves stood at $528.4 billion for the week ended October 14. Reserves declined on account of foreign currency assets and gold reserves. Forex reserves have been declining since July 29, with the exception of last week, when forex assets increased by $204 million.
The fall in forex reserves comes amid media reports of central bank intervention in the foreign exchange market to support the Indian currency and the rupee to below 82 levels. Rupee closed marginally higher at $82.69 per dollar on reports of RBI intervention. RBI has said on several occasions that it will intervene in the market to contain the volatility of the rupee.
RBI Deputy Governor T Rabi Shankar said India's foreign exchange reserves have played an important role in mitigating the impact of severe volatility in global markets in recent months. "The reserves remain healthy and complement the strong macroeconomic fundamentals of the Indian economy," he said at the Foreign Exchange Dealers Association of India's annual day celebrations.
The nearly 67% fall in forex reserves during the current fiscal was due to a change in valuations due to a stronger US dollar and higher US bond yields, RBI Governor Shaktikanta Das said at the latest post-policy conference call. Bank of Baroda Economist Aditi Gupta said that with no signs of weakening of the dollar's strength, the rupee may remain under pressure. Besides, factors such as high domestic inflation, sluggish exports and rising oil prices due to production cuts will also be negative for the Indian currency.
Earlier, OPEC+ in November had decided to cut crude oil production quota by 2 million barrels per day.
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