With the rupee coming under severe pressure due to meltdown in the Turkish lira, India’s foreign exchange reserves has come within striking distance of falling below the $400 billion mark.
Reserve Bank of India data showed that reserves fell $1.8 billion in the week to August 10 to $400.88 billion.
Foreign exchange dealers said that RBI was seen selling dollars to prevent the local currency from falling freely. The country’s trade deficit hit a 5-year high of $18.02 billion in July, putting added pressure on the local currency.
It has fallen about $26 billion from the record high level of $426.082 billion seen on April 13. RBI sold $14.4 billion in first quarter of the year as against a cumulative purchase of $8.8 billion in the corresponding quarter last year, Care Ratings said in a research note.
Foreign investment flows, however, turned positive after being negative in the first three months of the year. The debt and equity markets saw $941 million inflows in August so far, Care Ratings said.
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