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HomeFinance NewsIndia's forex reserves hit lowest point in 4 months

India’s forex reserves hit lowest point in 4 months

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India’s foreign exchange reserves have declined for the third consecutive week, reaching a four-month low of $590.70 billion as of September 22, according to data from the Reserve Bank of India (RBI). This represents a decrease of $2.3 billion compared to the previous week and a total decline of $5.9 billion over the past two weeks. The central bank has been selling dollars through public sector banks to prevent the rupee from falling to a record low against the dollar. Aside from intervention by the RBI, changes in foreign currency assets, including the appreciation or depreciation of other currencies held in the reserves, also contribute to fluctuations in the forex reserves.

The decline in India’s foreign exchange reserves reflects ongoing efforts by the RBI to stabilize the country’s currency market and prevent excessive depreciation of the rupee. By selling dollars, the central bank aims to maintain a balanced exchange rate against the dollar and prevent any sharp movements. The rupee had slightly appreciated by 0.2% against the dollar in the week the data pertains to, trading within a range of 82.8225 and 83.2725. However, it ended the week at 83.04, down 0.1% compared to the previous week. It is important to note that India’s foreign exchange reserves also include its Reserve Tranche position in the International Monetary Fund.

As India continues to navigate the challenges posed by currency volatility and external factors, the RBI’s intervention in the forex market remains critical to maintain stability. The central bank’s actions indicate its commitment to safeguarding the rupee and avoiding extreme fluctuations that could negatively impact the country’s economic prospects. Going forward, monitoring the fluctuations in the foreign exchange reserves will provide insights into the RBI’s ongoing efforts and the overall stability of India’s currency market.

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