MUMBAI: The country’s forex reserves, which crossed the $700 billion mark to become the world’s fourth largest, have halted the seven-week gaining streak to come off by $3.71 billion in the reporting week ending October 4, after having risen by a total of nearly $35 billion in the previous seven weeks.
The fall can be attributed to the constant market intervention by the RBI to stem the rupee slide, which has been under pressure for months now.
Meanwhile, the rupee plunged to record low of 84.06 on Friday, crossing the sensitive level of 84 first-time ever. During the day the unit had a lower 84.07. Yet on a weekly basis, the rupee is down only 0.3%. The week also marks the worst since May 2024 and losing 0.3% on-week as equity outflows surged and crude prices rose due to a worsening of the Middle Eastern conflict.
The RBI intervenes in the forex market to manage liquidity and prevent excessive rupee volatility either towards depreciation or appreciation, ensuring orderly market conditions without aiming for specific exchange rate targets. The monetary authority has no official level for the currency.
As per the weekly statistical supplement released by the RBI on Friday, the country’s foreign exchange reserves fell for the first time in eight weeks and came off a record high to stand at $701.18 billion in the week to October 4. The RBI data, the foreign exchange reserves had scaled $704.89 billion in the previous week, becoming the world’s fourth largest after China, Japan and Switzerland.
The reserves had hit a record high in the week to September 27, rallying by $12.6 billion, making the biggest weekly rise since mid-July 2023. The reserves were at $625.63 billion when the current fiscal year began.
As per the data, foreign currency assets (FCAs), which are biggest component of the reserves, dipped by $3.51 billion to $612.6 billion. Expressed in dollar terms, the FCAs include the effect of appreciation or depreciation of non-US units like the euro, pound and yen held in the foreign exchange reserves.
Gold reserves fell by $40 million to $65.76 billion. Special drawing rights saw a marginal dip of $123 million to stand at $18.43 billion. Reserve position in the IMF fell by $35 million to $4.35 billion.
