Decline in reserves is likely due to RBI intervention, aimed at preventing sharp depreciation of the rupee, which is now at or near its all-time low against the US dollar.
RBI Governor Shaktikanta Das said that while slowing growth was a concern, the next quarters would look better. Inflation, though, is a more immediate concern & would ease only in Q4.
Moody's, which downgraded country's rating from B1 to B2, also notes that ‘nascent reemergence of community-based tensions’, risk of further deterioration in law & order may dampen growth.
The rupee hit a record low of 83.29 per dollar in that turbulent week, and traders said the RBI had intervened in both the spot and forward markets to contain the slide.
Banks will have to ascertain the foreign currency exposure (FCE) of all entities at least annually, the RBI said, adding the revised rules will be effective from 1 January, 2023.
With US Fed hiking rates, RBI might be pushed to increase its own rates to slow simultaneous fall of rupee & India's forex reserves. But this could also hurt economic growth.
Forex reserves surged to $605 billion in the week to 4 June as the RBI mopped up dollars flowing into the nation’s booming stock market as well as via foreign direct investments.
Munir indicates that he’s willing to go for broke, even if it risks taking his country “and half the world” down with him. It’s important to understand where he is coming from.
India’s industrial output growth saw a 10-month low in June, with Index of Industrial Production (IIP) growing by mere 1.5% as against 1.9% in May 2025.
Standing up to America is usually not a personal risk for a leader in India. Any suggestions of foreign pressure unites India behind who they see as leading them in that fight.
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