Mumbai, Oct 20 (IANS): India’s foreign exchange reserves rose by $1.15 billion to $585.895 billion in the week ended October 13, continuing a decline over the past five weeks, according to Reserve Bank of India data released on Friday. It was reversed from.
This is a welcome development as a stronger currency kit will release more dollars into the market and give RBI more headroom to support the rupee. This is especially necessary at a time when oil prices are skyrocketing in the world market and demand for dollars suddenly increases to finance oil imports.
The country’s foreign exchange reserves fell by $2.166 billion in the week ended October 6 to $584.74 billion, a five-month low, according to RBI data released last week. This decline comes on top of a nearly $12 billion decline in foreign exchange reserves over the past four weeks.
TheRBI will intervene in the spot and forward markets by releasing more dollars to prevent the rupee from going into free fall if it comes under pressure.
A sharp depreciation in the country’s exchange rate limits the extent to which the RBI can intervene in the market to stabilize the rupee.
