Reserves Drop After Reaching One-Month High
India’s foreign exchange reserves fell to $635.72 billion as of February 14, breaking a three-week rising trend, according to the latest Reserve Bank of India (RBI) data. The reserves declined by $2.54 billion, the largest drop in a month, after gaining $14.3 billion over the past three weeks.
Why Did India’s Forex Reserves Fall?
The fluctuation in forex reserves is influenced by the RBI’s market intervention and changes in the value of foreign assets. The Indian rupee has been under pressure due to several factors, including:
- Sluggish economic growth
- Recent interest rate cuts
- Foreign outflows from local stocks
- Concerns over a global trade war following U.S. President Donald Trump’s tariff policies
Rupee Hits Record Low but Recovers
During the reported week, the rupee fell to a historic low of 87.95 against the U.S. dollar. However, intervention by the RBI, which sold dollars in the spot market, helped the rupee recover. The currency gained 0.7%, marking its best performance since mid-July 2023.
With global economic uncertainties and policy shifts, forex reserves will remain a key indicator of India’s financial stability in the coming weeks.
