RBI’s rupee defence: Forex reserves fall nearly $60 billion

India’s foreign exchange reserves fell by nearly $60 billion over roughly six weeks to $726.027 billion on October 9 as the Reserve Bank of India sold dollars to support the rupee, Economic Times Markets reported, citing official figures. Reserves had reached a record $785.706 billion on September 4.

The latest reporting week accounted for an $8.578 billion decline, according to figures from the RBI’s weekly statistical supplement cited in the report. The outlet attributed much of the depletion to dollar sales routed through large public sector banks.

Foreign currency assets account for most of the fall

Foreign currency assets, the largest component of India’s reserves, dropped by $7.142 billion in the latest week to $597.605 billion. Their decline over the six-week period totalled $50.563 billion.

That reduction was equivalent to about 35% of the $143.596 billion the central bank had accumulated between June and August through dedicated dollar mobilisation schemes and a swap window, the report said.

Oil prices, US yields and capital outflows pressure the rupee

The report described the rupee as one of Asia’s weakest-performing currencies, facing pressure from higher crude oil prices, rising US yields and persistent foreign capital outflows. It cited National Securities Depository Ltd data showing net foreign portfolio investor withdrawals of $26.8 billion from Indian markets so far this year.

Gold reserves also declined. The report put their value at $105.094 billion after a weekly fall of $1.319 billion, identifying October 8 as the endpoint for that figure, rather than the October 9 date used for total reserves.