Forex drops by $1.09 bn to $529 bn on sharp decline in gold reserves: Data

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India’s foreign exchange reserves dropped by USD 1.087 billion to stand at USD 529.994 billion for the week ended November 4 on a sharp decline in the gold reserves, the Reserve Bank said on Friday.

In the previous reporting week, the reserves had swelled by USD 6.561 billion to reach USD 531.081 billion, making it the biggest weekly jump in a year.

In October 2021, the country’s forex kitty had reached an all-time high of USD 645 billion. The reserves have been declining as the central bank deploys the kitty to defend the rupee amid pressures caused by global developments.

Foreign currency assets (FCA), a major component of the overall reserves, decreased by USD 120 million to USD 470.727 billion during the week to November 4, according to the Weekly Statistical Supplement released by the RBI.

Expressed in dollar terms, the foreign currency assets include the effect of appreciation or depreciation of non-US units like the euro, pound and yen held in the foreign exchange reserves.

The gold reserves dropped by USD 705 million to USD 37.057 billion, it said.

The Special Drawing Rights (SDRs) were down by USD 235 million to USD 17.39 billion.

The country’s reserve position with the International Monetary Fund (IMF) also dipped by USD 27 million to USD 4.82 billion in the reporting week, the apex bank data showed.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

 

India’s foreign exchange reserves dropped by USD 1.087 billion to stand at USD 529.994 billion for the week ended November 4 on a sharp decline in the gold reserves, the Reserve Bank said on Friday.

In the previous reporting week, the reserves had swelled by USD 6.561 billion to reach USD 531.081 billion, making it the biggest weekly jump in a year.

In October 2021, the country’s forex kitty had reached an all-time high of USD 645 billion. The reserves have been declining as the central bank deploys the kitty to defend the rupee amid pressures caused by global developments.

Foreign currency assets (FCA), a major component of the overall reserves, decreased by USD 120 million to USD 470.727 billion during the week to November 4, according to the Weekly Statistical Supplement released by the RBI.

Expressed in dollar terms, the foreign currency assets include the effect of appreciation or depreciation of non-US units like the euro, pound and yen held in the foreign exchange reserves.

The gold reserves dropped by USD 705 million to USD 37.057 billion, it said.

The Special Drawing Rights (SDRs) were down by USD 235 million to USD 17.39 billion.

The country’s reserve position with the International Monetary Fund (IMF) also dipped by USD 27 million to USD 4.82 billion in the reporting week, the apex bank data showed.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

 
 
By October 28, foreign exchange reserves stood at $531.1. If drawdown is taken on a pro-rata basis there could be further $27.7 billion dollars of withdrawals in the next five months
 

If the finance ministry’s assessment that there will be a drawdown of $45-50 billion from foreign exchange reserves in this financial year comes true, reserves at the end of the year would provide cover for around eight months. This import cover of foreign exchange reserves may be the lowest under the Narendra Modi government or the lowest in nine years.

Economic Times reported on Wednesday that the country’s balance of payments is likely to slip into a $45-50 billion deficit in the current financial year.

The dollar rose modestly on the yen following Bullard’s comments and is up about 1.2% for the week to 140.36 yen. It also rose 0.9% on the Australian dollar overnight to $0.6690 per Aussie, and is on course for its first weekly gain on the Aussie since mid-October.

The U.S. dollar index is up about 0.1% so far this week to 106.53, stabilising after a small miss on U.S. inflation last week triggered one of the dollar’s sharpest weekly drops in the free-floating exchange rate era on excitement about an end to rate hikes.

“The Fed obviously doesn’t want to acknowledge (that possibility) and has been saying there’s a lot more work to be done,” said Jason Wong, senior strategist at BNZ in Wellington.

“Markets are looking for further confirmation from the data,” he said, with U.S. inflation readings for November and December crucial for discerning a trend.

Fed funds futures pricing currently implies a peak rate just below 5% and for rates to start falling by late 2023. The Fed next meets Dec. 13-14.

Earlier this week, stronger-than-expected retail sales data had also shaken hopes for a pause in hikes, since it seemed to suggest consumers remained in spending mode.

In Japan, data showed consumer prices are surging at their fastest pace in 40 years, potentially putting pressure on authorities to step back from super-easy monetary policies, but the yen showed little immediate reaction.

Later on Friday, British retail sales data is due, and European Central Bank President Christine Lagarde is among a smattering of policymakers due to speak.

The New Zealand dollar was firm at $0.6153 as traders turn their attention to next week’s central bank meeting in Wellington, with markets divided over whether a 50 basis point or 75 bp hike is in the offing.

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Currency bid prices at 0123 GMT

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Euro/Dollar

$1.0376 $1.0365 +0.12% -8.72% +1.0378 +1.0358

 

Dollar/Yen

140.0300 140.1800 -0.07% +0.00% +140.4900 +140.0850

 

Euro/Yen

145.32 145.29 +0.02% +0.00% +145.5500 +145.2900

 

Dollar/Swiss

0.9517 0.9523 -0.02% +4.38% +0.9530 +0.9515

 

Sterling/Dollar

1.1899 1.1868 +0.27% -12.01% +1.1899 +1.1859

 

Dollar/Canadian

1.3307 1.3328 -0.13% +5.28% +1.3329 +1.3309

 

Aussie/Dollar

0.6705 0.6690 +0.16% -7.81% +0.6705 +0.6682

 

nz

Dollar/Dollar 0.6154 0.6131 +0.37% -10.10% +0.6154 +0.6120

 

 

All spots

Tokyo spots

Europe spots

Volatilities

Tokyo Forex market info from BOJ

 

(Reporting by Tom Westbrook; Editing by Ana Nicolaci da Costa)

By Tom Westbrook

SINGAPORE (Reuters) – The dollar was headed for its best week in a month on Friday, as hawkish remarks from Federal Reserve officials and stronger-than-expected retail sales data have put the brakes on a pullback that was triggered by signs of softening inflation.

It was helped overnight, too, by a 0.4% fall in sterling after Britain’s budget for tax rises and spending cuts disappointed investors.

St Louis Fed President James Bullard was the latest Fed official to push back on market hopes for a pause in interest rate hikes, saying that even on dovish assumptions, the funds rate needs to rise to at least 5-5.25% to curb inflation, from 3.75-4% currently.

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