India’s foreign exchange reserves have fallen to a seven-month low of $644.4 billion (?54.79 lakh crore), marking the lowest level since May 2024, according to the latest Reserve Bank of India (RBI) data. The rupee also experienced its sharpest decline, hitting a record low of ?85.80 per dollar before RBI intervention stabilized it at ?85.48. Ajit Mishra, SVP of research at Religare Broking, noted that the RBI sold $9.28 billion in the forex market in October to stabilize the currency. Despite these efforts, pressures from foreign investor sell-offs, a strong dollar, and global economic trends have contributed to the rupee’s depreciation.
India’s forex reserves had crossed $7 billion (approximately ?59 lakh crore) in late September 2024, but market volatility, U.S. Federal Reserve policies, and the incoming Trump administration have driven foreign outflows and strengthened the dollar. Gold reserves stand at $65.7 billion, according to the RBI. To address liquidity, the central bank reduced the cash reserve ratio (CRR) from 4.25% to 4% as part of its latest monetary policy. This adjustment allows commercial banks to lend more, potentially boosting economic growth by making additional capital available to borrowers.
The RBI also announced the schedule for treasury bill issuances for the first quarter of 2025. Bills worth ?28,000 crore will be auctioned on January 2, 9, 16, 23, and 30, as well as February 6 and 13. Larger issuances of ?33,000 crore are planned for February 21 and 28, and March 6, 13, 20, and 27. These measures reflect ongoing efforts to manage liquidity and stabilize financial markets amid fluctuating economic conditions.
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