Mumbai, April 1
The country’s foreign exchange reserves declined by $2.030 billion in the week ended March 25, 2022, primarily due to fall in foreign currency assets.
Forex reserves stood at $617.648 billion as at March 25, 2022.
Forex reserves had declined by $2.597 billion in the week ended March 18, 2022, and by $9.646 billion in the week ended March 11, 2022.
In the reporting week, foreign currency assets (FCAs) fell by $3.202 billion in the reporting week. FCAs comprise multi-currency assets (securities, deposits with other central banks & BIS, and deposits with commercial banks overseas) that are held in multi-asset portfolios.
The only component of the forex reserves that increased was gold, which was up $1.230 billion during the reporting week.
Other components
The other two components of the reserves declined -- Special Drawing Rights (by $44 million) and Reserve Position in the IMF ($14 million) -- during the reporting week.
Since March-end 2021, India’s forex reserves have increased by $40.664 billion.
Radhika Rao, Senior Economist, DBS, in a report on March 31, 2022, said that RBI’s strong intervention efforts are reflected in an $11 billion drop in foreign reserves this calendar year and down about $20 billion since hitting the record high in September 2021.
“In effect, reserves are being put to their intended use -- slow rupee volatility but not reverse its weakening trend. At current levels, the reserves stock is still well cushioned, ranking well on all adequacy metrics including short-term external debt (0.2x of reserves), total external debt, imports cover as well as on the IMF metrics,” Rao said.
Barclays, in a report, has forecast that India will record an overall balance of payments deficit of $20 billion in FY22-23, which would reduce its foreign reserves to $600 bilion by March 2023, from $620 billion in March 2022.
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.