RBI reserves fall to $734.6 billion after four consecutive weeks of decline
GS3Economy · S&T · Environment · Security· Monetary policy, RBI & banking· Prelims·
Currency depreciation and forex reserve management: a key GS3 topic on monetary policy and exchange rate stability.
Why in news
The RBI reported a four-week consecutive decline in foreign exchange reserves to $734.6 billion as the rupee weakened against the dollar despite intervention measures.
Background
RBI reserves fell from a peak of $785.71 billion on September 4 to $734.6 billion by the week ended October 2. The rupee fell nearly 0.5% to 96.8450 per dollar, approaching its all-time low of 96.96.
Facts for Prelims
- FactRBI reserves reached $734.6 billion in the week ended October 2, 2026.
- FactThe rupee reached a level of 96.8450 per dollar as of the week ended October 2.
- S&TForeign exchange swaps involve selling dollars in the spot market with a contract to buy them back at a future date.
- FactThe rupee's all-time low is cited as 96.96.
Prelims practice question
What is the cited all-time low for the Indian Rupee against the dollar?
- (a)95.50
- (b)99.10
- (c)98.20
- (d)96.96
Show answer
Answer: (d) 96.96 — The note cites 96.96 as the rupee's all-time low.
For Mains
Q. Analyze the factors influencing the volatility of the Indian Rupee and the role of the RBI's intervention mechanisms in maintaining exchange rate stability.
Dimensions to cover in your answer
- External shocks: Impact of rising global oil prices and overseas interest rates on capital outflows.
- Monetary intervention: Effectiveness of spot market dollar sales and foreign exchange swaps in curbing currency depreciation.
- Portfolio volatility: Influence of foreign portfolio investors' exit strategies on domestic currency stability.
Keywords: Foreign Exchange Reserves · Monetary Policy · Currency Depreciation · Foreign Exchange Swaps · Capital Outflow · Exchange Rate Stability
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