The reserves stood at $593.323 billion as on June 24. Out of this, foreign currency assets stood at $529.216 billion while reserves held in gold were valued at $40.926 billion, Reserve Bank of India data showed. The balance is kept with the International Monetary Fund as special drawing rights and reserves.
The central bank has spent more than $41 billion to defend the currency since February. In the three weeks before this, the reserves got depleted by $10.785 billion.
RBI’s currency support might continue given that imported inflation remains elevated and the rupee does not seem significantly overvalued on an REER basis, said Rahul Bajoria, MD & chief India economist at Barclays.
The rupee ended at 79.045 against dollar on Friday from 78.97 a dollar close on Thursday. The exit of overseas investors from Indian markets, coupled with weak macro indicators weighed on sentiments, said Sriram Iyer, senior research analyst at
Economists anticipate that India’s forex reserves, which acts as import cover and provides a cushion against any external risk, may fall further to about $565 billion by the end of FY23.
“When sentiment turns, we think the RBI’s reserves are likely to recover, meaning heavy intervention on the other side and limited scope for swift rupee appreciation,” he said.