It was also the eighth straight week when the reserves declined.Mumbai: Reserve Bank Governor Shaktikanta Das on Friday said 67 per cent of the decline in the foreign exchange reserves since April was due to valuation changes arising from strengthening US dollar and higher American bond yields.The forex reserves, which stood at USD 606.475 billion as on April 2, have declined to USD 537.5 billion as on September 23. It was also the eighth straight week when the reserves declined.In the current financial year up to September 28, the US dollar has appreciated 14.5 per cent against a basket of major currencies, causing turmoil in currency markets globally.The movement of the Indian rupee has, however, been orderly compared to most other countries, Mr Das said while unveiling the latest bi-monthly monetary policy review.The rupee has depreciated 7.4 per cent against the US dollar during the same period – faring much better than several reserve currencies as well as many of its EME and Asian peers, he added.Mr Das also said that a stable exchange rate is a beacon of financial and overall macroeconomic stability and market confidence.Noting that in recent days, there have been divergent views on the exchange rate of the rupee and the adequacy of India’s forex reserves, he said the rupee is a freely floating currency and its exchange rate is market determined.”RBI does not have any fixed exchange rate in mind. It intervenes in the market to curb excessive volatility and anchor expectations,” he said.Further, he said RBI’s interventions in the forex market are based on continuous assessment of the prevailing and evolving situation from the point of view of the central bank’s approach.”The aspect of adequacy of forex reserves is always kept in mind. The umbrella (of forex reserves) continues to be strong,” Das said.According to him, India’s foreign exchange reserve at USD 537.5 billion as on September 23, 2022 compares favourably with most peer economies.”About 67 per cent of the decline in reserves during the current financial year is due to valuation changes arising from an appreciating US dollar and higher US bond yields,” he said.Net foreign direct investment increased to USD 18.9 billion in April-July 2022 from USD 13.1 billion a year ago. Foreign portfolio investors have returned to the domestic market with net inflow of USD 7.5 billion during July-September after an outflow for nine consecutive months, he added.Mr Das also said there was an accretion of USD 4.6 billion to the foreign exchange reserves on Balance of Payments (BoP) basis during first quarter of 2022-23.India’s other external indicators, including, external debt to GDP ratio; net international investment position to GDP ratio; ratio of short-term debt to reserves; and debt service ratio also indicate lower vulnerability as compared with most other major EMEs, he added.India’s external debt to GDP ratio is the lowest among major EMEs.On the current account deficit touching 2.8 per cent of the GDP in the first quarter of the fiscal, Mr Das said, “we remain confident of meeting our external financing requirements comfortably”. (Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)
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