India Forex Reserves Take $2.9-Billion Hit As RBI Defends Rupee
The local currency has depreciated 0.5% since the start of June, even as it remains the best-performing currency in Asia after Hong Kong.
India's foreign exchange reserves declined from recent highs to $652.9 billion for the week-ended June 14, the Reserve Bank of India data showed on Friday. The forex kitty fell nearly $2.9 billion over the previous reporting week.
The RBI has been intervening in the domestic currency market, amid pressure on the rupee, by selling dollars from its reserves. The local currency has depreciated 0.5% since the start of June, even as it remains the best-performing currency in Asia, after Hong Kong.
The forex stock had recovered after hitting a low of $524.5 billion in October 2022, as the central bank replenished its kitty amid solid overseas inflows.
Foreign investors have pumped in Rs 73,134 crore into the country's debt and equity markets so far this year, according to data from the National Securities Depository Ltd. While equities have seen a flight of foreign capital, the domestic debt market has seen big inflows.
More robust greenback inflows are expected ahead of India's inclusion in JPMorgan's Government Bond Index-Emerging Markets.
For the week-ended June 14, foreign currency assets—a major component of the reserves—increased by $2.1 billion to $574.2 billion, RBI data showed.
In dollar terms, foreign currency assets include the effect of the appreciation or depreciation of non-US units like the euro, pound and yen held in foreign exchange reserves.
Gold reserves declined by $1 billion to $56 billion during the week.
Last month, RBI Governor Shaktikanta Das said the central bank is focused on building robust buffers of foreign currency reserves through its intervention in the dollar-rupee currency market.
"It's our prime focus to build up a strong umbrella in the form of substantial quantum of forex reserves, which will help us when the cycle turns or when it rains heavily," Das said.
