Forex reserves down $5.9 bn in a week

 Forex reserves of India have declined $5.9 billion to $590.59 billion for the week ended june 17. 

The decline in the reserves were mainly due to the decline of foreign currency assets of $5.4 billion. The central banks intervention in the foreign exchange market and selling dollars to curb excessive volatility in the exchange rates and prevent depreciation of rupee. Forex reserves dropped over $10 billion in two weeks.

The start of Ukraine war have put pressure on most emerging market currencies because the investors rush for safe haven assets.

The rupee has declined to 5 percent against dollar in 2022. It fell to an all time low of 78.39/$1 and the previous close was at 78.31/$1.

The decline was reflective of the RBI expending reserves to curb market volatility rather than owing factors such as revaluation. RBI has been protecting the rupee from excessive volatility in the face of US rate hikes and elevates commodity prices.

The RBI has decided to take advance delivery of outstanding long forward dollar position points to protect the depleting forex reserves.