Forex Reserves Declines: Since the fall in the rupee against the dollar, there is a continuous decrease in the Foreign Currency Reserves of India. Since the rupee weakened against the dollar after the Russia-Ukraine war, foreign investors of the country are continuously withdrawing money and investing in less risky places. The Reserve Bank of India has tried to stop the rupee, despite this, on Tuesday, the rupee had fallen to Rs 77.77 against the dollar. RBI has said in its State of Economy report that in March 2022, $ 20 billion has been sold from its Monetary Fund to prevent further weakening of the rupee.
Foreign exchange reserves left for imports for 10 months
Due to the strengthening of the dollar for the last two weeks, the rupee has been depreciating continuously. Although RBI has tried to stop the rupee. But the RBI has said in its State of Economy report that as of May 6, India has foreign exchange reserves of $ 596 billion, from which only the estimated imports of the next 10 months can be met. For the last nine weeks, there has been a decline in foreign exchange reserves. Foreign exchange funds have decreased by $36 billion since Russia invaded Ukraine. RBI has indicated that it will continue to intervene to prevent further depreciation in the rupee.
RBI’s concern
The RBI has said in its report that the global growth outlook looks better bleak due to tensions around the world and a jump in commodity prices. Central banks around the world are raising interest rates. Emerging economy is posing a risk of capital outflow and rising commodity prices leading to inflation. At the same time, the epidemic can affect the economic prospects in the near future.
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