India’s forex reserves fall to 20-month low

The world’s fifth-largest economy – India’s foreign exchange reserves fell $7.5 billion to $572.7 billion during the week ended on 15 July, according to latest data of the country’s central bank.

The reserves are now at 20-month low, lowest since 6 November 2020 when it was $568 billion, reports Business Standard.

The decline in reserves of almost $60 billion in 2022 is mostly attributable to the strong involvement of the central bank in the foreign currency market. Since the outbreak of war in Europe in late February, the rupee has been under pressure. In 2022, the Indian rupee has declined against the dollar by almost 7 percent.

Reserve Bank of India (RBI) Governor Shaktikanta Das on Friday said the current level of foreign exchange reserves were adequate.

“…the Indian rupee is holding up well relative to both advanced and emerging market economies (EME) peers. This is because our underlying fundamentals are strong, resilient, and intact. The recovery is gradually strengthening. The current account deficit is modest. Inflation is stabilising. The financial sector is well-capitalised and sound. The external debt-to-GDP ratio is declining. The foreign exchange reserves are adequate,” Shaktikanta said.

The July RBI bulletin had said the foreign exchange reserves at $ 580.3 billion on 8 July 2022, were equivalent to 9.5 months of imports projected for 2022-23.

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