India's forex reserves drop to eight-month low amid rupee pressure
The reserves declined by $4.1 billion in the reported week, after falling by a cumulative $13.7 billion in the prior three weeks
India's foreign exchange reserves fell for the fourth consecutive week and stood at an eight-month low of $640.28 billion, as of Dec. 27, data from the Reserve Bank of India showed on Friday.
The reserves declined by $4.1 billion in the reported week, after falling by a cumulative $13.7 billion in the prior three weeks.
Changes in foreign currency assets are caused by the central bank's intervention in the forex market as well as the appreciation or depreciation of foreign assets held in the reserves.
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The RBI intervenes on both sides of the forex market to curb undue volatility in the rupee.
The domestic currency weakened to its all-time low of 85.8075 last week, down nearly 0.3% during the period.
Concerns about India's slowing growth and widened trade deficit have hurt the rupee, alongside broad-based dollar's strength amid a hawkish shift in the US Federal Reserve's policy outlook and expectations surrounding the country's President-elect Donald Trump's policies.
The RBI has likely been selling dollars via state-run banks to curb weakness in the rupee and prevent a large-scale slump.
The rupee settled at 85.77 on Friday. The domestic unit was down 0.2% for the current week, its ninth consecutive weekly fall.
The forex reserves also include India's reserve tranche position in the International Monetary Fund.
