India's Forex Reserves Fall Below $600 Billion, Lowest In a Year

India's forex reserves have declined nearly $34 billion, or about 5.4 per cent, since Russia invaded Ukraine on February 24.

India's foreign exchange (FX) reserves fell below $600 billion for the first time in a year, weighed by persistent capital outflows and the rupee's weakness driven by the dollar's broad surge in recent months. 

The latest data for the April 29 ending week from the Reserve Bank of India (RBI) released on Friday showed the country's FX reserves fell by $2.695 billion to $597.728 billion, marking the eighth straight week of declines. The last time the country's import cover fell below the $600-billion-mark was during the week ending May 28, 2021. 

The latest week's data was also the lowest since end-April last year when the country was battling its worst wave of the coronavirus pandemic. Back then, hospitals across the country were scrambling for beds and oxygen in response to a deadly second surge in infections; the World Health Organization (WHO) had said in a report that India accounted for nearly half the coronavirus cases reported worldwide and a quarter of the deaths during that period.

This year, though, the fallout from the Russia-Ukraine war has weighed on global supply chains, leading to runaway inflation and, in turn, has forced major central banks on a tightening policy path.