MUMBAI: India’s foreign exchange reserves fell to their lowest in over 23 months on likely dollar sales by the country’s central bank to stem the fall in the local currency.
The reserves fell $7.94 billion to $553.1 billion as of September 2, data released by the Reserve Bank of India showed Friday. The reading is the lowest since October 9, 2020.
The Indian rupee has fallen about 7% this year and stayed around the middle of the pack among emerging market Asian peers.
The central bank has drawn down its forex reserves to limit the scale of the rupee’s depreciation even as it set multiple fresh record lows in recent weeks amid a strong dollar. The rupee has hovered close to around 80 per dollar for most of the last two months, setting a record at 80.1288 on August 29 after a hawkish speech by US federal Reserve Chairman Jerome Powell at Jackson Hole in Wyoming.
India’s adjusted forex reserves, including forwards, have declined at an ‘unsustainable’ monthly pace of $17 billion over the past five months, wrote Divya Devesh, head of Asean and South Asia FX research at Standard Chartered Plc, in a note.
