New Delhi July 8 2022: India’s foreign exchange reserves fell to their lowest level in over 14 months as the central bank sold dollars to prop up the currency.
The reserves fell $5.01 billion to $588.3 billion as of July 1, data by the Reserve Bank of India released Friday showed. The decline in the reserve kitty comes amid the rupee hitting record lows.
India’s currency is in a downward spiral, weakening nearly 6% this year, as fears of a global recession and rising oil prices stoke outflows and cause deficits to widen.
Earlier this week, India’s central bank announced a raft of measures including higher overseas borrowing limits for companies and easier foreign ownership rules in government bonds to bolster its reserves.
While the currency’s drop has been less than some of its emerging-market peers, the fresh lows are sparking fears of a deeper sell off with strategists predicting further losses.
India’s forex reserves could fall further in the next reading as the dollar’s strength persists, said Kanika Pasricha, an economist at Standard Chartered Plc in Mumbai.
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