India’s foreign exchange reserves continued its fall for the fifth straight week as the Reserve Bank of India appears to be selling dollars from its coffers to prevent sharp depreciation of the rupee amid a surge in global crude prices. The reserves fell by $2.471 billion in the week to April 8 to $604.004 billion, RBI data showed. In the last five weeks, reserves fell by a massive $28.5 billion
Movements in the FCA occur mainly on account of the purchase and sale of foreign exchange by the RBI, income arising out of the deployment of the foreign exchange reserves, external aid receipts of the central government, and changes on account of revaluation of the assets.
According to RBI data, foreign exchange reserves moved up steadily between March and September last year. However, there has been a decline since then. With oil crude prices moving over $90 a barrel, the rupee has come under pressure as higher oil prices will mean a larger import bill. The RBI intervenes in the currency market to reduce volatility. India imports over 80 percent of its crude oil requirements. Economists estimate a 10 percent hike in oil prices leads to a $15-billion increase in the current account deficit.
Forex Reserve Review & Its Impact, By Our Expert, One Can Have A View:
RBI FOREX RESERVE DATA FOR LAST 3 MONTHS ARE AS:-
PUSHKAR ANAND (THE BOURSE ACADEMY)