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India’s foreign exchange reserves fell by $276 million to $699.96 billion, despite rising gold reserves. The rupee showed slight strength supported by falling crude prices and strong stock markets, while foreign investors boosted market sentiment.
Declining Foreign Exchange Reserves
New Delhi: India's foreign exchange reserves have been declining for some time, a cause for concern for the government, especially as it attempts to boost the country's economy.
The Reserve Bank of India (RBI) reported that foreign exchange reserves declined by $276 million to $699.96 billion in the week ended October 3. The reserves also declined by $2.33 billion in the previous week.
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Foreign currency assets constitute the largest component of foreign exchange reserves. This week, they declined by $4.05 billion to $577.71 billion. The value of foreign exchange assets is also affected by fluctuations in other currencies, such as the euro, pound, and yen, against the dollar.
Although foreign exchange assets have declined, the country's gold reserves have increased. They increased by $3.75 billion to reach $98.77 billion. Additionally, Special Drawing Rights (SDRs) increased by $25 million to $18.81 billion.
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Meanwhile, India's reserves with the International Monetary Fund (IMF) declined slightly to $4.66 billion.
The rupee strengthened slightly in the foreign exchange market. On Friday, the rupee gained 10 paise to close at 88.69 per dollar (provisional). This strength was driven by gains in domestic stock markets, a decline in crude oil prices, and RBI intervention.
However, the strength of the US dollar limited the rupee's gains. The rupee traded in a range of 88.50 to 88.80 throughout the day.
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Indian stock markets remained positive. The BSE Sensex rose 328.72 points to close at 82,500.82, while the Nifty 50 gained 103.55 points to close at 25,285.35. Foreign institutional investors (FIIs) also bought shares worth ₹1,308.16 crore, keeping the market bullish.
The dollar index, which measures the dollar's strength against six major currencies, fell 0.21% to 99.32. Brent crude oil prices also fell 0.61% to $64.85 per barrel. The decline in oil prices supported the domestic market and the rupee.
