India's Forex Reserves drops lowest in a year
India's foreign exchange (FX) reserves fell below $600 billion for the first time in a year. The latest data from the Reserve Bank of India showed the country's FX reserves fell by $2.695 billion to $597.728 billion, marking the eighth straight week of declines.
The data was also the lowest since end-April last year due to the coronavirus pandemic. While the import cover is still a healthy near-$600 billion, it has fallen to its lowest in a year, and the latest trade moves in the rupee point to further erosion of the country's FX repository.
This year, the fallout from the Russia-Ukraine war has weighed on global supply chains, leading to inflation. India's forex reserves have declined nearly $34 billion, or about 5.4 percent, since Russia invaded Ukraine.
Global supply chain issues and increases in commodity prices, including those caused by the war in Ukraine, have caused serious inflation in countries around the world, causing central banks to take measures to address the problem.
Meanwhile, gold reserves dipped by $1.164 billion to $41.60 billion. SDR reserves stood at $18.3 billion lower by $362 million. The country's reserve position in the IMF is at $5.001 billion lower by $59 million in the week ending April 29.
The RBI has been taking aggressive measures to prevent a bloodbath in the foreign exchange markets, selling dollars via public sector banks and thereby causing the decline in forex reserves. The RBI does not want forex reserves to dip below the USD 600 billion mark, which means it could change its policy on dollar sales in the coming weeks.
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