The country’s forex reserves have declined by USD 25.147 billion between April 13 and August 10, with the rupee on a downward spiral since the beginning of the year forcing the Reserve Bank to sell dollars to defend the local currency. The forex reserves had touched a record high of USD 426.028 billion in the week to April 13, 2018 and plunged to a low of USD 400.88 billion in the week to August 10, losing a whopping USD 1.822 billion within a week, according to the latest to RBI data. It attributed the drop to a steep fall in the foreign currency assets. Though officially the RBI does not maintain the rupee at a determined level, the massive fall in the reserves clearly shows that the central bank has been selling the greenback to prop up the domestic currency.
The rupee had yesterday closed at a historic low of 70.15 to the dollar. It had touched an intra-day low of USD 70.40 on Thursday, making it one of the worst performing emerging market currencies, losing over 9 per cent since January this year. The currency market was closed today for Parsi New Year.
In the previous week, the reserves had dipped by USD 1.489 billion to USD 402.703 billion, as per the RBI data. Since April 13 till today, the country’s reserves have been depleted by USD 25.14 billion due to the RBI’s intervention in the foreign exchange market. That the Reserve Bank has been heavily intervening in the market is clear as it has been a net seller of the US currency between April and June.
The monetary authority has sold a massive USD 14.434 billion of the US currency on a net basis in the three months in the spot market. In the week to August 10, the foreign currency assets, a major component of the overall reserves, plummeted by USD 1.949 billion to USD 376.265 billion, as per the latest data from the central bank.
Expressed in US dollar terms, foreign currency assets include the effect of appreciation/depreciation of the non-US currencies such as the euro, pound and the yen held in the reserves. However, gold reserves rose by USD 145.6 million to USD 20.691 billion in the reporting week. The special drawing rights with the International Monetary Fund (IMF) dipped by USD 9.2 million to USD 1.466 billion. The country’s reserve position with the IMF also declined by USD 9.2 million to USD 2.458 billion, the apex bank said.