MUMBAI:India's foreign exchange reserves experienced their largest decline in over 11 months, likely due to dollar sales by the Reserve Bank of India to stabilize the rupee.
This was exacerbated by equity outflows, which were further compounded by the recent turmoil in Adani group companies.
According to data released by the Reserve Bank of India on Friday, the reserves fell by $8.3 billion to $566.95 billion, marking the sharpest drop since April 2022.
It's worth noting that in October 2021, India's forex reserves hit a record high of $645 billion. However, the reserves have been declining as the central bank uses them to support the rupee amidst pressure from global developments.
Of late, the rupee had come under pressure after Hindenburg Research, a short seller, accused Adani group of alleged stock manipulation on January 24. Despite denying all accusations, the conglomerate's troubles caused $3.3 billion of stock outflows from India this year.
Gold reserves also fell for the second consecutive week, dropping by $919 million to $42.862 billion. The RBI reported that Special Drawing Rights (SDRs) decreased by $190 million to $18.354 billion, and the country's reserve position with the International Monetary Fund (IMF) decreased by $102 million to $5.145 billion during the reporting week.
