In one of the largest decreases in India’s forex reserves in recent times, the country’s foreign exchange kitty dropped $10.746 billion to $690.43 billion during the week ended October 11, according to the latest RBI data. This is the second consecutive week of decline.
Gold reserves decreased by $98 million to $65.658 billion during the week ended on October 11. The special drawing rights (SDRs) were down by $86 million to $18.339 billion, the RBI data released on October 18 showed.
In the previous week ended October 4, India’s forex reserves had declined $3.709 billion to $701.176 billion.
At the end of September, the reserves had hit an all-time high of $704.885 billion.
For the week ended October 11, foreign currency assets, a major component of the reserves, decreased by $10.542 billion to $602.101 billion, according to the latest RBI data.
Expressed in dollar terms, the foreign currency assets include the effect of appreciation or depreciation of non-US units like the euro, pound and yen held in the foreign exchange reserves.
India’s reserve position with the IMF was down by $20 million to $4.333 billion in the reporting week, the apex bank data showed.
Why are India’s Forex Reserves Falling?
India’s forex reserves are falling due to continuous foreign funds outflows from the equities market by foreign portfolio investors (FPIs). The FPIs are pulling out their money from India and moving to a cheaper market like China following a huge stimulus announcement there recently.
In the current month so far, FPIs have pulled out Rs 78,190 crore.
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