Forex reserves rise by $1.85 billion to $595.05 billion: According to the RBI, India’s foreign exchange reserves rose by $1.853 billion to $595.051 billion in the week ended on June 30, 2023. The overall reserve had dropped by $2.901 billion to $593.198 billion in the previous reporting week.
Daily Current Affairs Quiz: July 2023
In October 2021, the country’s forex reserve had reached an all-time high of $645 billion. The reserves have been declining as the central bank deploys the kitty to defend the rupee amid pressures caused majorly by global developments.
Decline in Gold Reserves
India’s gold reserves experienced a decline of $472 million to $43.832 billion during the same period, as reported by the RBI. The reduction in gold reserves indicates potential adjustments in the central bank’s portfolio composition or other strategic considerations.
RBI Committee Recommends Internationalisation of Rupee
An RBI-appointed group, led by RBI executive director RS Ratho, recently suggested a path to accomplish the internationalisation of the Indian rupee. The committee emphasized that the rupee has the potential to become an international currency due to India’s robust economic growth and resilience. The report suggests promoting the use of rupee in international trade invoicing, settlement, and capital account transactions to enhance its global presence.
Rupee’s Recent Performance
The Indian rupee fell 23 paise against the US dollar on July 7, reaching a six-week low and posting its worst performance in seven weeks. The depreciation was driven by concerns over potential interest rate hikes by the Federal Reserve and losses in Asian currencies. The rupee closed at 82.74 per dollar, down from the previous close of 82.51.
Factors Influencing Rupee’s Weakness
Several factors have contributed to the weakness of the Indian rupee, including expectations of upcoming interest rate hikes, the strength of the US dollar, and rising crude oil prices supported by OPEC production cuts. These factors have led market participants to consider the negative impact on the rupee’s value. However, the strength of the Indian capital market has somewhat mitigated the rupee’s fall.