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India’s forex reserves drop USD 3.79 billion to USD 586.9 billion: Know the reason


Image Source : PTI The Reserve Bank of India

In its Weekly Statistical Supplement, the Reserve Bank on Friday said that India’s forex reserves dropped further by USD 3.794 billion to USD 586.908 billion for the week ended September 29. In the previous reporting week, the overall reserves had declined by USD 2.335 billion to USD 590.702 billion as of September 22.

Reason for the decline

Notably, the country’s forex kitty had reached an all-time high of USD 645 billion in October 2021. The reserves took a hit as the central bank deployed the kitty to defend the rupee amid pressures caused majorly by global developments since last year.

According to the Weekly Statistical Supplement released by the RBI, for the week ended September 29, the foreign currency assets, a major component of the reserves, decreased by USD 3.127 billion to USD 520.236 billion. 

RBI keeps interest rates unchanged

Earlier on Friday, the Reserve Bank of India expectedly left its key interest rate unchanged as inflation remains a major risk, and signalled it would keep liquidity tight using bond sales to bring prices closer to target.

The monetary policy committee, which has three members from the central bank and a similar number of external members, held the benchmark repurchase rate at 6.50 per cent in a unanimous decision for the fourth consecutive meeting in a row. It retained a ‘withdrawal of accommodation’ stance. 

What RBI Governor said? 

Governor Shaktikanta Das said the central bank has identified high inflation as a major risk to macroeconomic stability and sustainable growth and “remains resolutely focused on aligning inflation to the 4 per cent target on a durable basis”. He further said that the incomplete transmission of past 250 basis-points rate hikes to bank lending and deposit rates reinforced MPC’s imperative to continue its stance of withdrawal of accommodation.

(With inputs from PTI)

ALSO READ: RBI keeps Repo Rate unchanged at 6.50% for fourth time in a row

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