India's Forex Reserves Down For Second Straight Week To $696.67 Billion
For the week ended July 11, foreign currency assets — a major component of the reserves — declined $2.48 billion to $588.81 billion.
India's foreign exchange reserves fell for the second straight week to $696.67 billion for the week ended July 11, according to data from the Reserve Bank of India on Friday.
The country's forex kitty fell by $3.06 billion over the previous reporting week. In the previous reporting week, the reserves had dropped by $3.05 billion to $699.74 billion.
The RBI's forex holdings had steadily recovered in the first six months of this calendar year, but the numbers have slumped in the last two weeks.
The decline can be attributed to robust central bank intervention in the currency market to support the rupee amid a strong dollar. The RBI typically sells dollars from its reserves when the local currency is under pressure to curb excessive volatility.
The Indian rupee weakened by eight paise to close at 86.16 against the US dollar on Friday. In morning trade, the rupee had briefly appreciated to 86.06, supported by a softer dollar and a marginal decline in global crude oil prices. It opened at 85.99 at the interbank foreign exchange market, reflecting initial optimism.
The currency also came under pressure as the FIIs offloaded equities worth Rs 3,694.3 crore on Thursday.
Foreign investors have pulled out $6.82 billion from the country's debt and equity markets so far this year, according to data from the National Securities Depository Ltd.
For the week ended July 11, foreign currency assets—a major component of the reserves— declined $2.48 billion to $588.81 billion, according to the RBI data. In dollar terms, foreign currency assets include the effect of the appreciation or depreciation of non-US units like the euro, pound and yen held in foreign exchange reserves.
Gold reserves decreased by $0.5 billion to $84.35 billion during the week.
India ranks as the fourth-largest holder of foreign exchange reserves, sufficient to cover nearly a year of imports. The country's forex holdings are the fourth largest, after China, Japan and Switzerland.
