Foreign exchange reserves are declining rapidly, so many did not fall even in 2008

New Delhi: The country’s foreign exchange reserves have fallen sharply recently. According to RBI data, the country’s foreign exchange reserves stood at $545.65 billion on September 16, its lowest level in nearly two years. India’s foreign exchange reserves have shrunk by $85.88 billion since Russia’s attack on Ukraine. Experts say that due to the strengthening of the dollar, India’s foreign exchange reserves have declined. But the big reason is that RBI sold a lot of dollars in the forex market. India’s foreign exchange reserves fell faster this time than the 2008 global financial crisis.

According to a report by Business Standard, the country’s foreign exchange reserves fell by $57.7 billion between March 2008 and March 2009. During this period, the rupee fell by 19.22%. Four years later, in 2013, the rupee had depreciated more than this time. Then the Federal Reserve signaled tight monetary policy and there was a stir in markets around the world. Then, between May 1 and September 3, the value of the rupee fell by 20.6%. During this period, there was a $21.56 billion drop in foreign exchange reserves between April and September. But this time, the country’s foreign exchange reserves have been shrinking faster. The rupee has depreciated by 8.20% since December last year.

Forex reserves: Sharp drop in India’s foreign exchange reserves! Reached two-year low, do you know why the drop is coming?
Foreign exchange reserves equal to the number of months of imports
RBI’s foreign exchange reserves have grown rapidly in recent years. Foreign fund inflows increased due to lower US interest rates and an improving domestic current account. It increased by $99.2 billion in 2020-21 and by $30.3 billion in 2021-22. But it has fallen sharply in recent months. Experts say the decline in foreign exchange reserves is worrying. Foreign exchange reserves stood at $553.1 billion on September 2, equivalent to nine months of imports. A year ago, this was equivalent to 15 months of imports.