Foreign exchange reserves fall $325 million in a week to $560.94 billion

The Reserve Bank of India’s (RBI’s) foreign exchange reserves declined by $325 million to $560.94 billion in the week ended February 24, latest central bank data showed.

The slight fall in the reserves — for the fourth week in a row — was largely on account of a decline in the RBI’s foreign currency assets, which reduced by $166 million to $495.91 billion in the previous week.

In the previous week, the rupee strengthened 0.1 per cent against the US dollar, settling at 82.75 per US dollar on February 24.

Following sharp increases in the reserves in November and December, the RBI’s kitty has been declining for the past few weeks, largely in line with renewed concerns over rate hikes by the Federal Reserve and a resultant rise in the US dollar globally.

Reserves worth $576.8 billion as on January 27 cover 9.4 months of projected imports for the current fiscal year, the RBI staff said in the central bank’s February Bulletin.

From June to October of 2022, the RBI was a net seller of US dollars in the currency market as the central bank sought to rein in excessive volatility in the rupee’s exchange rate amid the Ukraine war and aggressive rate hikes by the Federal Reserve.

The foreign exchange reserves increased by $28.9 billion since the end of September to $561.6 billion as on January 6.