Despite the RBI’s intervention to prevent the Indian rupee from depreciating against the dollar, foreign exchange reserves have been falling steadily.
New Delhi, First Published Jul 9, 2022, 5:25 PM IST
Despite the RBI’s intervention to prevent the Indian rupee from depreciating against the dollar, foreign exchange reserves have been falling steadily.
As on July 1, foreign exchange reserves have declined to $5883.10 crore. 500 crores down in just about a week.
A fall in foreign currency assets by $4.5 billion was the main reason for the decline in foreign exchange reserves. In order to prevent further depreciation of the rupee in the foreign exchange market, the RBI sold dollars but could not stop the depreciation of the rupee.
The Indian rupee has depreciated by 0.9 percent since the start of July, hitting an all-time low of 79 rupees against the dollar. In the year 2022 alone, the rupee has depreciated by 6.2 percent. On the 5th, the value of the rupee fell to Rs.79.36 paisa against the dollar in an unprecedented manner.
The currencies of emerging economies have continued to depreciate since Russia started war with Ukraine in February. Investors are withdrawing their investment and investing safely in dollars.
As on February 25, RBI had foreign exchange reserves of $6315.30 crore. But the Reserve Bank continued to sell its dollar holdings in the market in an attempt to stem the rupee’s decline against the dollar.
Due to this, foreign exchange has decreased by 500 crore dollars. Reserves with the RBI started to decline gradually from a peak of $64.2 billion on September 3 last year.
The foreign exchange reserves currently held by the RBI will be sufficient for imports for the next 10 months. 302.90 crores worth of foreign investors withdrew investment in June alone.
Last Updated Jul 9, 2022, 5:25 PM IST
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