 "Forex Card")
India's foreign exchange reserve fell by $7.3 billion to a near two-month low of $595 billion in the week ended August 18, registering the most substantial weekly decline in over six months, according to the latest data from the Reserve Bank of India (RBI).
The decline in the reserves was primarily due to a decrease in foreign currency assets, which fell by $6.6 billion to $528 billion in the previous week. The RBI has been actively intervening in the foreign exchange market through dollar sales to protect the rupee from depreciating further.
In the week that ended on August 11, the reserves had increased by $708 million to $602 billion.
"The RBI could have sold around $2.5 billion to $3 billion in the previous week, and some of the reduction in foreign currency assets, approximately 67 per cent, results from revaluation adjustments," said Amit Pabari, Managing Director at CR Forex.
The local currency depreciated by 0.31 per cent in the last week, hitting an all-time low closing level of 83.15 against the dollar on August 17.
On Friday, the Indian unit appreciated by 7 paisa to settle at Rs 82.65 against the US dollar. Traders refrained from placing large bets on caution ahead of the Chair of the US Federal Reserve, Jerome Powell's speech at the Jackson Hole Symposium after market hours that day.
"USDINR (US dollar-Indian Rupee) spot closed 7 paise higher at Rs 82.65 a dollar, as traders were on the sidelines ahead of the Jackson Hole meeting tonight. We expect volatility to increase next week," Anindya Banerjee, Vice President of Currency Derivatives and Interest Rate Derivatives at Kotak Securities, said.
