There has been a huge drop in India’s foreign exchange reserves, know how much is the reserve with the country

Photo:Indian Television Sharp drop in India’s foreign exchange reserves

Indian foreign reserves: India once again Foreign exchange reserves decrease is observed. Reserve Bank of India (RBI) According to US figures, it fell by $2.7 billion to $506.994 billion. Earlier on July 29, India’s foreign exchange reserves had increased by $2.4 billion.

What does RBI say?

There is also a sign of economic slowdown in the world behind the decline in foreign exchange reserves. The Reserve Bank of India is constantly trying to control it. Its intervention reduced the rate of depletion of foreign exchange reserves during volatility in the foreign exchange market. This is stated in the study of RBI officials. The study covers the current fluctuations caused by the Russian-Ukrainian war since 2007. The central bank has a stated policy of interference in the foreign exchange market. The central bank intervenes if it sees volatility in the market. However, the Reserve Bank never gives a target level for the currency.

The Ukraine-Russia war is the reason

The study by Saurabh Nath, Vikram Rajput and Gopalakrishnan S of the RBI’s Financial Markets Operations Department indicates that during the global financial crisis of 2008-09, reserves declined by 22%. It only fell by 6% during the volatility generated after the war between Ukraine and Russia. The study indicates that the opinions expressed here are those of the authors and do not necessarily reflect the views of the central bank.

The Reserve Bank was successful in meeting its foreign exchange reserve intervention target. This is reflected in the low depletion rate of foreign exchange reserves. According to the study, in absolute terms, the global financial crisis of 2008-09 resulted in a $70 billion drop in reserves. While during the period of Covid-19, it only decreased by $17 billion. At the same time, due to the Russian-Ukrainian war, there was a drop of 56 billion dollars until July 29 of this year.

Major factors affecting volatility include interest rates, inflation, government debt, current account deficit, commodity dependence, political stability as well as global developments, according to the study.

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