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India’s foreign exchange reserves hit lowest level since July 2020 as RBI rescues INR plunge

By on October 23, 2022 0

By Malvika Gurung

Investing.com — According to recent data released by the Reserve Bank of IndiaThe country’s foreign exchange reserves fell to a new multi-year low in the week ended October 14, led by a decline in its foreign currency holdings as the central bank stepped in to save the national currency’s fall against the .

India’s foreign exchange reserves plunged by $4.5 billion to $528.37 billion during the highlighted week, falling to their lowest level since July 24, 2020, thanks to the intervention of the RBI bank to cushion the fall against the greenback.

The main driver was a fall of more than $2.8 billion in RBI’s foreign currency assets to $468.87 billion, as well as its holdings plunging $1.5 billion to $37.45 billion in the course of the week.

The country’s foreign exchange reserves continued their downward trend after unexpectedly improving for the first time in 10 weeks in the week ending Oct. 7.

Factors such as rising US interest rates, a slowdown in global economic growth and geopolitical tensions are driving the US dollar against global currencies, leading central banks to step in and save their home currencies in the face of a booming greenback.

Interventions by central banks around the world have led to an erosion of nearly $1 trillion this year in global foreign currency reserves, the largest drop since Bloomberg began compiling this data in 2003.