MUMBAI: India’s foreign exchange reserves declined for the first time in eight weeks, falling by $3.7 billion to $701.2 billion in the week ended Oct 4, according to RBI data. Despite the decline, reserves remained above the $700 billion level.
The fall comes after reserves reached a record high of $704.9 billion in the week ending Sept 27. Before the reporting week’s dip, reserves increased by nearly $35 billion over a span of seven weeks.
Of the $3.7 billion decline, foreign currency accounted for a $3.5 billion fall while the value of gold in reserves declined by $40 million to about $66.8 billion. The week’s fall is the biggest since the first week of Aug this year when reserves fell by $4 billion. Thus far, the largest weekly rise has been $12.6 billion in mid-July 2023.
During the week ended Sept 2024, the rupee had its worst performance since May, as it closed at 83.7 against the dollar – down 21 paise from 83.49 the previous week. During the week ended Oct 4, however, the rupee fell by nearly 30 paise.
Changes in foreign currency assets are influenced by RBI’s interventions in the forex market and fluctuations in the value of foreign assets held in reserves. RBI has been selling dollars near the 83.98 mark to prevent the rupee from weakening further. But reserves are also affected by the valuation of non-dollar currencies and gold, which form a part of India’s forex reserves.