India’s forex kitty dropped by $1.318 billion in the week that ended on June 9, 2023. As per RBI’s latest statistical data, the country’s reserves are now at $593.749 billion. Except for SDRs, all other components witnessed a decline in the week under review with foreign currency assets (FCA) dragging the most.
Data from RBI showed that forex reserves stood at $593.749 billion in the week that ended on June 9, down by $1.318 billion. Prior to this week, reserves had climbed by $5.929 billion.
Further, in the week, FCA which is the largest component of forex reserves, dipped by $1.128 billion to $525.073 billion. In the previous that ended on June 2nd, FCA jumped by $5.270 billion.
Moreover, in the week that ended on June 9, 2023, gold reserves declined by $183 million to $45.374 billion. Also, reserve position at IMF contracted by $8 million to $5.115 billion. However, SDRs surged by $2 million to $18.187 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.
Moreover, on Friday, the Indian rupee snapped a four-day winning streak against the American currency after the domestic trade deficit widened to a five-month high. Also, the dollar saw momentum after US Federal Reserve commented on two more hikes ahead in 2023. On Wednesday, Fed for the first time in 15 months.
On Friday, after hitting a 5-week high of 82.03 per dollar, the rupee settled at 81.94 against the greenback.
In May 2023, India’s merchandise trade deficit widened to $22.12 billion from the previous month where it stood at $15.24 billion.
According to Jateen Trivedi, VP Research Analyst at LKP Securities, the rupee advanced against the US dollar as it gained 30p to reach 81.95. As there were gains in the domestic equities market, which helped boost the sentiment for the rupee. Additionally, crude oil prices experienced a decline, which further supported the rupee’s advance. Foreign Institutional Investors (FIIs) also contributed to the positive sentiment by investing in the Indian capital markets. On Thursday, the rupee had closed lower at 82.25 against the dollar due to the strength of the greenback internationally and a negative trend in the domestic equities market.
Trivedi added, “The dollar index, which measures the strength of the US dollar against a basket of currencies, saw a slight increase at 102.23. Capital market positive rally mainly along with dollar weakness helped the rupee gain momentum. Rupee range can continue higher between 81.65-82.15.”
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Updated: 16 Jun 2023, 06:31 PM IST