IANS | 28 Oct, 2023
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 Friday.
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.
This gives cause for concern as the RBI uses the country’s forex reserves to stabilise the rupee when it turns volatile.
The RBI intervenes
in the spot and forwards markets by releasing more dollars to prevent
the rupee from going into a free fall when it comes under pressure.
Any
sharp decline in the country’s forex kitty leaves the RBI less headroom
to intervene in the market to stabilise the rupee which could weaken
the Indian currency.
