Reserve Bank of India (RBI) Governor Sanjay Malhotra on Wednesday said that India’s forex reserves were enough to cover 11 months of merchandise imports.
India’s forex reserves fell over $9 billion to 688.9 as of August 1, Governor Sanjay Malhotra said during his Monetary Policy Committee meeting announcements.
The fall was likely driven by the RBI’s dollar sales to support the rupee, which came under pressure after U.S. President Donald Trump imposed 25% tariffs on Indian goods and warned of further penalties over the country’s continued purchases of Russian oil, economists said.
On Tuesday, U.S. President Donald Trump said he would “very substantially” raise tariffs on Indian imports from the current 25% within 24 hours, citing New Delhi’s continued purchases of Russian oil.
Typically, the RBI, from time to time, intervenes in the market through liquidity management, including through the selling of dollars, with a view to preventing a steep depreciation in the rupee.
The RBI closely monitors the foreign exchange markets and intervenes only to maintain orderly market conditions by containing excessive volatility in the exchange rate, without reference to any pre-determined target level or band.