India's foreign exchange reserves fall $2.4 billion to $560 billion

The Reserve Bank of India’s (RBI’s) foreign exchange reserves declined $2.4 billion to $560 billion in the week ended March 10, latest data showed.

The decline in foreign exchange reserves was largely on account of a fall in the RBI’s foreign currency assets, which dropped $2.2 billion to $494.86 billion in the previous week.

Last week, the rupee depreciated 0.1 per cent against the US dollar.

In the week ended March 3, the RBI’s foreign exchange reserves had snapped four consecutive weeks of losses, rising $1.5 billion. Over the past six weeks, the RBI has been selling US dollars to contain volatility in the rupee’s exchange rate, currency dealers said.

The domestic currency has experienced turbulence since February due to apprehensions of more rate hikes by the US Federal Reserve.

Over the last nine days, however, the collapse of the California-based Silicon Valley Bank has led to speculation of the Fed slowing down on rate hikes. The rupee, however, has not benefited much from the altered view on Fed rates as the global wave of risk aversion has sent investors to the safety of the dollar.

Reserves worth $576.8 billion as on January 27, 2023, cover 9.4 months of projected imports for the current financial year, said the central bank’s February Bulletin.

From June to October last year, 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 $28.9 billion since September-end to $561.6 billion as on January 6.