News Tech: Data released by the Reserve Bank of India (RBI) on July 15 showed India’s foreign exchange reserves fell by $8 billion to $580.25 billion in the week ending July 8, its first drop in more than 15 months. was at a low level. The weekly decline is the largest since the week ending April 1, when reserves fell by $11.17 billion. The decline in foreign exchange reserves was attributed to the RBI’s foreign currency assets falling by $6.66 billion, down from $524.75 billion to $518.09 billion as of July 1. Gold reserves fell to $39.19 billion from the previous week’s $40.42 billion.
Supply chain disruptions due to sanctions against Russia after its invasion of Ukraine have caused severe energy shortages in Europe and kept commodity prices high. India imports nearly 85% of its crude oil demand, and high oil prices threaten to widen India’s trade gap, further exacerbating the rupee’s woes. Central banks intervene in the foreign exchange market to control large movements.
The reduction in RBI foreign exchange reserves comes amid a sharp devaluation of the rupee exchange rate. Indian units hit a record low of 79.96 to the dollar on July 15, down more than 5% in the 23rd fiscal year. The rupee has been trending downwards for quite some time due to heightened global recession risks, high risk aversion and continued outflows abroad.
India’s currency has fallen 4.6% against the US dollar since Russia attacked Ukraine, despite the RBI’s massive foreign exchange sell-off in recent months to stem the rupee’s decline. did. RBI officials, including Governor Shaktikanta Das, have repeatedly insisted that the RBI ensures an orderly movement of the rupee. The central bank said on July 6 that it held “sufficient levels” of foreign exchange reserves as a buffer against external shocks.