India’s FX reserves drop $9bn to about $689 billion, reflecting tariff-driven rupee defence

MUMBAI: India’s foreign exchange reserves fell to $688.9 billion as of August 1, Reserve Bank of India Governor Sanjay Malhotra said on Wednesday.

The forex reserves fell $9.3 billion compared to the previous week, which economists said reflects the central bank’s defence of the rupee amid tariff-related uncertainties.

Detailed data on forex reserves will be released later this week.

The rupee slid 1.18% against the dollar in the week through August 1, marking its sharpest weekly decline in nearly three years.

It has lost another 0.2% so far this week and would likely have breached its record low if not for the Reserve Bank of India’s intervention to support the currency, according to traders.

India central bank net bought $1.76 billion in forex market in May

India faces the imposition of a 25% tariff on its shipments to the U.S. from Friday, and President Donald Trump has warned of “very substantial” additional levies because of New Delhi’s oil imports from Russia.

The RBI kept its growth forecasts unchanged at its policy review on Wednesday and left rates unchanged.

“Given that the Indian rupee is weakening and narrowing of the global interest rate differentials, the scope for rate reduction was slim,” said Umesh Kumar Mehta, chief investment officer at SAMCO Mutual Fund.