IANS | 01 Nov, 2023
The Indian rupee is facing headwinds as higher yields on US bonds and
rising crude oil prices in the global market have firmed up the demand
for dollars.
According to market analysts, while the Reserve Bank
of India (RBI) has succeeded in keeping the volatility of the rupee in
check by releasing US dollars from its reserves, this cannot continue
beyond a point as there has been a continuous decline in India’s foreign
exchange kitty in recent weeks.
The rupee was trading at 83.27 vis-a-vis the US dollar in pre-noon trade on Wednesday down from 83.25 in the previous session.
The
RBI has been continuously intervening in the forex market during
October to prevent the rupee from falling below the low of 83.29 vs the
US dollar. Traders said.
India's foreign exchange reserves fell by
$2.36 billion to $583.53 billion during the week ended October 20,
according to RBI data released on October 27.
In the preceding
week the country’s forex reserves had increased by $1.15 billion,
reversing a continuous decline over the previous five weeks.
The
country’s foreign exchange reserves had fallen by $14.166 billion to a
five-month low of $584.74 billion for the week ended October 6.
With the fresh decline the forex reserves have fallen even further.
Any
sharp decline in the country’s forex kitty leaves the RBI less headroom
to intervene in the market to stabilise the rupee which would weaken
the Indian currency.
