India's Forex Reserves Fall $13 Billion in Fourth Weekly Decline to $734.6 Billion
India's foreign exchange reserves declined by $12.95 billion to $734.6 billion in the week ended October 2, marking the fourth consecutive weekly fall. The total reserves have contracted $51.1 billion from their peak of $785.7 billion recorded in the week ended September 4. RBI Governor Sanjay Malhotra noted that despite the decline, reserves provide approximately 11 months of import cover and account for 94.4% of India's external debt.
Market analysts attribute the decline to Reserve Bank of India dollar sales and valuation changes in foreign currency and gold holdings. The central bank sold approximately $30 billion on a net basis during September to manage currency volatility. Foreign currency assets, the largest component, fell $10.7 billion to $604.7 billion. Gold reserves decreased $2.3 billion to $106.4 billion, while India's reserve position with the IMF dropped $15 million to $4.8 billion.
The rupee has weakened 1.62% against the dollar since September amid higher crude oil prices and external capital outflows. The RBI has deployed spot and forward market transactions and dollar-rupee sell-buy swaps to limit excessive currency fluctuations and manage liquidity.
