India's forex reserves fell by $6.687 billion to $564.053 billion in the week ending August 19, the RBI's weekly statistical data showed.
"India's forex reserves dipped to USD 564bn as on August 19, lowest since October 2020. The main reason behind this fall is dip in foreign current assets which the RBI has been using in forex market to cushion the fall in rupee. Since the start of this year, the geopolitical uncertainities and back to back rate hikes by the Fed have led to weakening of emerging market currencies including INR," said Ritika Chhabra, Economist and Quant Analyst, Prabhudas Lilladher.
In the week prior, during the week ending August 12, the country's foreign exchange reserves had declined by $2.238 to $570.74 billion.
The reserve had declined every single week barring the increase in the last week of July. It has fallen for 20 of the 26 weeks since Russia invaded Ukraine in late February.
The drop in the reserves during the week ended August 19 was due to a fall in the Foreign Currency Assets (FCA) and the gold reserves, as per the Weekly Statistical Supplement released by RBI on Friday.
FCA fell $5.779 billion to $501.216 billion in the reporting week.
Going forward, Chhabra added that the forex reserves are likely to stay under pressure in the near term as DXY is back to its mid-july highs and oil prices are expected to stay elevated.