India’s foreign exchange reserves fell to their lowest level in more than a year, falling from nearly $6 billion to around $591 billion in the week ending June 17, the data shows. .

Data from the Reserve Bank of India’s weekly statistical supplement showed the country’s foreign exchange reserves fell by $5.87 billion to $590.588 in the week ending June 17, from $596.458 billion the week ending June 10 below the $600 billion level for the second week in a row.

For the third week in a row, the country’s foreign exchange reserves have shrunk. In the last three weeks under review, it has fallen by $10.785 billion.

This drop in the country’s import coverage is mainly due to the surge in the dollar across the board, with emerging market currencies being hit harder than the Japanese yen.

The rupiah has fallen significantly, hitting new intraday highs and all-time highs – nearly every other day since the market broke 77 to the dollar just after the Russian-Ukrainian war began in late February.

The rupee rose above the 78 to the dollar rate for the first time on June 13, during the latest RBI reporting period for foreign exchange reserves.

Forex traders said weakness in Asian currencies, a lackluster trend in domestic equities and continued foreign capital outflows weighed on investor sentiment.

“A phrase that is beginning to be used more widely within the central banking community is the need for ‘more aggressive’ monetary tightening to fight inflation,” noted Chris Turner, global head of markets at ING.

“Central bankers pushing real interest rates higher will continue to hurt risky assets and pro-cyclical currencies. This is a positive environment for the dollar. of the need for “more aggressive” monetary tightening around the world now,” he added.

Judging by the rupee’s performance, and with the RBI’s active participation in the spot and forward foreign exchange markets to defend the nascent rupee, further erosion of the country’s import war chest is more likely. likely.

Indeed, the rupee hit a new all-time low at 78.33 against the US dollar on Friday.

Another breakdown of the RBI report showed that all components of the country’s foreign exchange reserves declined during the week under review.

Foreign currency assets (FCA), which constitute the largest component of foreign exchange reserves, decreased by $5.362 billion to $526.882 billion, according to a report by PTI.

The value of appreciation or depreciation of non-US currencies held in foreign exchange reserves, such as the euro, pound, and yen, is included in foreign currency holdings (FCA), expressed in dollars.

Gold holdings fell by $258 million to $40.584 billion.

International Monetary Fund (IMF) Special Drawing Rights (SDRs) fell $233 million to $18.155 billion in the week ending June 17.

The news showed that the country’s reserve position with the IMF fell by $17 million to $4.968 billion in the reporting week.