India’s foreign exchange reserves dropped by $8 billion to $553.11 billion as of the week ended September 2, the lowest since October 9, 2020, the Reserve Bank of India (RBI) said on September 9.
The $8 billion decline in reserves was the most since July 8. The reserves stood at $561.05 billion in the prior week, or in the week ended August 26 and have fallen for five consecutive weeks.
The decline in reserves was led by a drop in foreign currency assets to $492.12 billion, down from $498.65 billion in the prior week. Gold assets also fell to $38.30 billion as on September 2, down from $39.64 billion in the week prior.
The RBI is responsible to prevent wild fluctuations in the rupee. Whenever the rupee has depreciated significantly, the RBI has stepped into the market by selling dollars from its forex kitty, according to money market participants. The rupee has been quite volatile of late as several central banks across the world tightened monetary policy to curb record inflation rates, shrinking the global liquidity pool.
RBI officials, including Governor Shaktikanta Das, have said on multiple occasions that the central bank will ensure an orderly movement of the rupee's exchange rate against the dollar.
Most recently, RBI Governor Shaktikanta Das said on September 5 that the RBI has been present in the market on a “regular basis”, providing liquidity and confidence to facilitate its smooth and normal functioning. Exchange rate stability is an intrinsic element of the RBI’s overall macroeconomic and financial stability, he had said.
Das had also said that the rupee has moved in an "orderly" fashion against the dollar so far in this financial year and is reflecting global and domestic fundamentals. He had further said that the rupee’s depreciation was among the lowest in the world.
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