Forex reserves touch fresh all-time low

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April 25, 2015 12:12 AM

Forex reserves rose by $2.79 billion last week to a fresh all-time high...

Forex reserves rose by $2.79 billion last week to a fresh all-time high of $343.20 billion, data from the Reserve Bank of India showed. Forex reserves have jumped by $33.79 billion over the last one year on the back of aggressive dollar purchases by the RBI from the market. The central bank has bought a massive $82 billion between April 2014 and March 2015 from the spot dollar/rupee market, besides buying through forward contracts.


RBI had been aggressively mopping up dollars to curb the rupee’s appreciation and shore up reserves. In fact, the RBI has absorbed almost all inflows into the local debt market. The RBI has maintained that it intervenes only to curb volatility in the forex market and not specifically to shore up reserves. Indeed, the central bank was seen selling dollars on Thursday to curb volatility in the dollar/rupee pair.

The rupee has depreciated 1.88% during the week, becoming the worst performing currency among Asian peers. It closed at 62.56/$ on Friday. According to currency dealers, the intervention of the RBI through dollar sales was not aggressive, indicating that the central bank perhaps wants the currency to depreciate.

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