Mumbai: India’s foreign exchange reserves declined $2.163 billion to $688.267 billion in the week ending October 18, 2024, according to RBI’s weekly statistical supplement. India’s forex reserves declined for the 3rd straight week after falling $10.746 billion to $690.43 billion in the week ending October 11, 2024.
RBI’s forex kitty pared gains to end at $701.176 billion in the week ending October 4, 2024, from an all-time high of $704.885 billion.
#NEWSALERT | India’s forex reserves drop USD 2.16 billion to USD 688.26 billion for the week ended October 18, says RBI#ForexReserves #RBI pic.twitter.com/vkyjKOOBRO
— News9 (@News9Tweets) October 25, 2024
Apart from FII outflows, another factor that is likely to have affected forex assets is the potential outflow of Hyundai Motor India IPO proceeds.
What led to a decline in India’s weekly forex reserves
India’s foreign currency assets declined $3.865 billion to $598.236 billion during the week under consideration, while gold reserves were down $1.786 million to $67.444 billion during the week, according to RBI data. Special Drawing Rights (SDRs) declined $68 million to $18.271 billion and the reserve position with the IMF fell $16 million to $4.316 billion during the week ending October 18, 2024.
The Indian rupee weakened against the US dollar to 84.0775 per unit of the greenback prompting the central bank to intervene in current markets. The RBI has admitted that it intervenes in currency markets from time to time to prevent the rupee’s free fall against the US dollar.
To be sure, the FCA decline has been exacerbated by FII outflows in recent weeks, which has affected broader markets, especially the benchmark BSE Sensex and NSE Nifty. FII outflows in October surged to a new record high of $9.5 billion, outpacing the previous record of $8.35 billion seen in March 2020, when the COVID-19 pandemic was announced.
India’s forex reserves touched the $683 billion mark in the week ending August 30, 2024, marking a new record. India’s forex reserves have been supported by the central bank’s gold purchases amid rising global geopolitical volatility as well as a broader de-dollaristion push among the world’s emerging economies.
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