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Mint
3 days ago
- Business
- Mint
Indias forex reserves dip $3.06 bn to $696.67 bn, second straight weekly decline
Mumbai (Maharashtra) [India], July 20 (ANI): India's foreign exchange reserves fell by USD 3.06 billion to USD 696.67 billion for the week ending July 11, marking the second straight week of decline, according to the official data released by the Reserve Bank of India (RBI). In the previous reporting week of July 4, the country's forex reserves witnessed a slip of USD 3.049 billion to USD 699.736 billion. In the week ending July 11, foreign currency assets, which are the major constituent of the forex reserves, fell USD 2.477 billion to USD 588.81 billion, possibly becoming the major reason for the fall in the forex reserves. The Gold reserves, another major component of the forex, again witnessed a sharp fall of USD 498 million to USD 84.348 billion. The country's Special Drawing Rights (SDRs) with the global financial body, the International Monetary Fund (IMF), saw a dip of USD 66 million to USD 18.802 billion during the reporting week of July 11, according to the RBI data. The Reserve Position in the IMF also decreased by USD 24 million, according to the data. Central banks worldwide are increasingly accumulating safe-haven gold in their foreign exchange reserves kitty, and India is no exception. The share of gold maintained by the Reserve Bank of India (RBI) in its foreign exchange reserves has almost doubled since 2021, till recently. In 2023, India added around USD 58 billion to its foreign exchange reserves, contrasting with a cumulative decline of USD 71 billion in 2022. In 2024, the reserves rose by a little over USD 20 billion, touching an all-time high of USD 704.885 billion at the end of September 2024. India's foreign exchange reserves (Forex) are sufficient to meet 11 months of the country's imports and about 96 per cent of external debt, said Governor Sanjay Malhotra while announcing the outcome of the Monetary Policy Committee (MPC) decisions. The RBI governor expressed confidence, stating that India's external sector is resilient and key external sector vulnerability indicators are improving. Foreign exchange reserves, or FX reserves, are assets held by a nation's central bank or monetary authority, primarily in reserve currencies such as the US Dollar, with smaller portions in the Euro, Japanese Yen, and Pound Sterling. The RBI often intervenes by managing liquidity, including selling dollars, to prevent steep Rupee depreciation. The RBI strategically buys dollars when the Rupee is strong and sells when it weakens. (ANI)
Time of India
3 days ago
- Business
- Time of India
Forex kitty update: Reserves drop $3.06 billion to $696.67 billion; second weekly decline in a row
India's foreign exchange reserves fell by $3.06 billion to $696.67 billion for the week ended July 11, marking the second consecutive weekly decline, according to data released by the Reserve Bank of India (RBI). The forex kitty had previously decreased by $3.049 billion to $699.736 billion in the week ending July 4. For the week ending July 11, the foreign currency assets, a primary component of forex reserves, reduced by $2.477 billion to $588.81 billion, contributing significantly to the overall decline. The Gold reserves experienced a considerable reduction of $498 million, settling at $84.348 billion. During the reporting week of July 11, the country's Special Drawing Rights (SDRs) with the IMF decreased by $66 million to $18.802 billion, according to RBI data. The data also showed a reduction of $24 million in the Reserve Position at the IMF. Central banks globally are increasing their holdings of gold as a secure asset in their foreign exchange reserves, including India. The RBI's gold proportion within its foreign exchange reserves has seen a twofold increase since 2021 until recent times. India enhanced its foreign exchange reserves by approximately $58 billion in 2023, contrasting with a total reduction of $71 billion in 2022. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like An engineer reveals: One simple trick to get internet without a subscription Techno Mag Learn More Undo The reserves increased by over $20 billion in 2024, achieving a record high of $704.885 billion by the end of September 2024. India's foreign exchange reserves can cover 11 months of imports and approximately 96 per cent of external debt, according to Governor Sanjay Malhotra's statement during the Monetary Policy Committee (MPC) meeting announcement. The governor conveyed optimism about India's external sector, noting its resilience and the improvement in key external sector vulnerability indicators. Foreign exchange reserves, managed by a country's central bank, mainly consist of reserve currencies—primarily the US Dollar, along with smaller amounts of the Euro, Japanese Yen, and Pound Sterling. (With ANI inputs) Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
India.com
3 days ago
- Business
- India.com
Indias Forex Reserves Dip From $3.06 Bn To $696.67 Bn, Second Straight Weekly Decline
Mumbai: India's foreign exchange reserves fell by USD 3.06 billion to USD 696.67 billion for the week ending July 11, marking the second consecutive week of decline, according to official data released by the Reserve Bank of India (RBI). In the previous reporting week ending July 4, the country's forex reserves had slipped by USD 3.049 billion to USD 699.736 billion. In the week ending July 11, foreign currency assets—the major component of forex reserves—fell by USD 2.477 billion to USD 588.81 billion, likely emerging as the primary reason behind the decline in total reserves. Gold reserves, another key component, also saw a sharp fall of USD 498 million, bringing them down to USD 84.348 billion. The country's Special Drawing Rights (SDRs) with the International Monetary Fund (IMF) declined by USD 66 million to USD 18.802 billion during the reporting week, as per the RBI data. The Reserve Position in the IMF also decreased by USD 24 million. Central banks worldwide are increasingly accumulating safe-haven gold in their foreign exchange reserves, and India is no exception. The share of gold maintained by the RBI in its forex reserves has nearly doubled since 2021. In 2023, India added around USD 58 billion to its forex reserves, in contrast to a cumulative decline of USD 71 billion in 2022. In 2024, the reserves rose by a little over USD 20 billion, reaching an all-time high of USD 704.885 billion at the end of September. India's foreign exchange reserves are currently sufficient to cover 11 months of the country's imports and about 96 per cent of its external debt, said Governor Sanjay Malhotra while announcing the outcome of the Monetary Policy Committee (MPC) decisions. The RBI Governor expressed confidence, stating that India's external sector remains resilient, with key vulnerability indicators showing improvement. Foreign exchange reserves, or FX reserves, are assets held by a nation's central bank or monetary authority, primarily in reserve currencies such as the US Dollar, with smaller portions in the Euro, Japanese Yen, and Pound Sterling. The RBI often intervenes in the forex market to manage liquidity—selling dollars to prevent steep rupee depreciation and buying dollars when the rupee is strong.
Qatar Tribune
4 days ago
- Business
- Qatar Tribune
What is next after significant dollar depreciation?
There is no market like the foreign exchange (FX) market. With over USD 7.5 trillion in daily turnover, FX is by far the largest and most liquid financial asset class in the world. Unlike equities or bonds, FX operates 24 hours a day, five days a week, with major currency pairs being traded across every continent. Moreover, FX markets act as real-time barometers of global macroeconomic dynamics, instantly reflecting shifts in capital flows, risk sentiment, interest rate expectations, and geopolitical developments. Movements in major currency pairs offer a uniquely fast and comprehensive signal of how investors are repositioning in response to both cyclical and structural global trends. In this context, recent USD weakness has taken many market participants by surprise, contradicting the previous consensus of a 'strong USD' associated with a long-standing US economic exceptionalism and Trump 2.0-related policy tailwinds. In fact, after peaking in early January 2025 on the back of a rally driven by expectations for a market friendly new US administration under Trump, the USD index (DXY) collapsed by 12%. Importantly, the sharp DXY depreciation amounted to the worst start of the year for the US currency since 1973, when then President Richard Nixon engineered the USD de-pegging from gold and a significant currency devaluation. The recent DXY depreciation was also broad based, including all major currencies within the DXY basket, i.e., the Euro (EUR), the Japanese Yen (JPY), the Pound Sterling (GBP), the Canadian Dollar (CAD), the Swedish Krona (SEK), and the Swiss Franc (CHF). This major movement was driven by a significant spike in economic policy uncertainty coming from the US. This has been caused by convoluted fiscal and trade policy making, which damped investor sentiment and led to a significant slowdown of US growth expectations, as well as longer-term questions about governance, rule of law and the future of the US role as a safe haven for foreign capital. After such a significant move, however, it is natural to consider what is next for the USD. Has the depreciation gone too far? What to expect for the medium- and long-term? In our view, while the sharp move and extended positioning of traders may grant a pullback of the USD over the short-term, conditions are likely set for further USD depreciation over the medium- and long-term. Three main arguments sustain our position. First, the big gap in growth between the US and other major advanced economies are set to narrow significantly over the coming years, effectively moderating the so-called US exceptionalism. Strong net migration and a looser US fiscal stance have been strong forces behind the US outperformance. However, new migration policies and limited fiscal space all point to a further US slowdown. In contrast, leading economies from the Euro area, such as Germany, are expected to perform a much more accommodative fiscal policy, increasing investments in defence and infrastructure. As a result, the US-Euro area GDP growth differential, which favoured the US by an annual average of 220 basis points (bps) over the last few years, is set to narrow to 70 bps over 2025-2027. This should strengthen the EUR against the USD, driving the DXY further down – the EUR counts for 57.6% of the DXY basket. Second, an assessment of the USD suggests that the currency is overvalued and in need for an adjustment. A common way to look at currency 'valuations' is to analyse trade-weighted, inflation-adjusted exchange rates, i.e., the real effective exchange rates (REER), and compare it to their own long-term averages or historical norms. This REER metric is more robust than traditional FX rates as it captures changes in trade patterns between countries as well as economic imbalances in the form of inflation and inflation differentials. The REER picture for May 2025 suggests that the USD is indeed the most overvalued currency in the advanced world, by more than 17% of its notional 'fair value.' Hence, it would be expected for the currency to adjust towards fair prices over the medium-term. Third, cross-border financial asset positions suggest that a structural re-balancing of global capital allocations may trigger a significant wave of capital outflows from the US. The US is currently a large net debtor to the rest of the world, with a net international investment position (NIIP) that is negative by USD 24.6 trillion. The picture has also been deteriorating sharply, as the NIIP of the US progressed from a marginal negative figure of around 9% of GDP at the start of the GFC to 88% of GDP by the end of last year. This suggests that the US is by far the country where most global economic imbalances tend to concentrate. This level of cross-exposure seems to be starting to become uncomfortable to both creditors and debtors, requiring significant adjustments. All in all, this year has brought so far the sharpest depreciation of the USD of the last half a century. However, over the medium- to long-term, there is still scope for further USD depreciation, due to the narrowing of the US economic outperformance, the overvaluation of the USD, and the massive accumulation of non-resident assets in the US. A more orderly process of currency adjustments would probably require significant global macro cooperation. — By QNB Economics
Free Malaysia Today
5 days ago
- Business
- Free Malaysia Today
Dollar set for weekly gain as firm US data tempers Fed easing bets
For the week, the US dollar has gained 0.73% against the Japanese currency. (Reuters pic) TOKYO : The US dollar headed for a second straight weekly gain against major peers, buoyed by some solid US economic data that supported the view the Federal Reserve (Fed) can afford to wait a while longer before cutting interest rates again. The yen remained on the back foot heading into upper house elections on Sunday in Japan, with polls suggesting the ruling coalition is at risk of losing its majority – a development that would stir policy uncertainty and complicate tariff negotiations with the US. Bitcoin hovered just below US$120,000, after this week pushing to an all-time peak of US$123,153.22, with Congress passing a bill to create the framework for dollar-pegged stablecoins. The dollar index, which measures the currency against six leading counterparts, held steady at 98.456 as of 0038 GMT, keeping it on track for a 0.64% weekly advance and building on the previous week's 0.91% rally. The dollar index climbed as high as 98.951 yesterday for the first time since June 23 after US data showed retail sales rebounded more than expected in June and first-time applications for unemployment benefits dropped to a three-month low last week. Earlier in the week, a report showed consumer prices increased by the most in five months in June, suggesting tariffs were starting to have an impact on inflation. Traders currently price about 45 basis points of rate cuts for the remainder of the year, down from closer to 50 basis points at the start of the week. At the same time, the dollar index remains 9.3% lower over the course of this year, following a steep selloff in March and April when President Donald Trump's erratic trade policies undermined confidence in US assets, sending the currency, Treasury bonds and Wall Street all lower. Clouds of uncertainty still hang over the dollar though, which has been shaken in recent days and weeks by fiscal worries from Trump's massive spending and tax cut bill, as well as the US president's relentless criticism of Fed chair Jerome Powell for not cutting rates. 'The US dollar remains vulnerable to the downside if concerns about US policymaking further undermine investor confidence in USD assets,' Commonwealth Bank of Australia analysts wrote in a client note. The US currency's drop earlier this week on speculation Trump was aiming to oust Powell 'was a case in point,' the analysts said. The dollar tumbled on Wednesday on a Bloomberg report that Trump was planning to fire Powell soon, before paring losses when Trump denied the news. Trump has said repeatedly that interest rates should be at 1% or lower, compared with the current 4.25%-4.5% range. The dollar was steady at ¥148.60, hovering not far from the 3-1/2-month high of 149.19 from Wednesday, as signs grew that Japan's coalition would fall short of retaining its majority, potentially giving more sway to opposition parties that back consumption tax cuts to ease the burden on voters from rising prices. For the week, the dollar has gained 0.73% on the Japanese currency. Japan, which initially was touted by the White House as likely to be among the first to reach a trade deal, has been deadlocked with Washington over politically sensitive issues of car and agriculture tariffs. Japan's top trade negotiator, Ryosei Akazawa, held talks with US commerce secretary Howard Lutnick yesterday, as Tokyo races to avert a damaging 25% levy that would become effective after the Aug 1 deadline. The euro rose 0.25% to US$1.1626, clawing its way off yesterday's three-week low of US$1.1556. For the week, the euro is down 0.59%. Sterling rose 0.13% to US$1.3436, slightly paring its weekly decline to 0.41%. Bitcoin edged up 0.35% to around US$119,899 on the day.
