As per recent data released by the Reserve Bank of India, the country’s foreign exchange reserves tumbled to a fresh multi-year low in the Oct 14-ended week, led by a decline in its foreign currency assets, as the central bank intervened to rescue the domestic currency’s fall against the US dollar.
India’s forex reserves plunged $4.5 billion to $528.37 billion in the underlined week, falling to its lowest level since July 24, 2020, on the bank of RBI’s intervention in cushioning the Indian rupee’s fall against the greenback.
The major driver was an over $2.8 billion slide in RBI’s foreign currency assets to $468.87 billion, along with its gold holdings plunging by $1.5 billion to $37.45 billion during the week.
The country’s forex reserves continued their downward trend after improving unexpectedly for the first time in 10 weeks during the Oct 7-ending week.
Factors including elevating US interest rates, a slowdown in global economic growth and geopolitical tensions are dominating the US dollar against global currencies, leading to central banks intervening and rescuing their domestic currencies against a soaring greenback.
The interventions by central banks globally have led to an erosion of nearly $1 trillion this year in global foreign-currency reserves, the steepest decline since Bloomberg began to compile this data in 2003.
