MUMBAI: The forex reserves fell by $3.049 billion to $699.736 billion in the week to July 4, while the rupee snapped its three days of gains, losing 15 paise to close 85.80 on the increasing uncertainty around a deal with the on reciprocal tariffs.
The rupee closed 15 paise lower at 85.80 against the dollar on Friday from Thursday’s close primarily weighed down by the uncertainty around the US tariffs, which was also reflected in the broader equity market which closed the week in deep red losing three of the five trading sessions. On Friday, the indices bled badly with the Sensex plunging 689 points or 0.83% and the Nifty losing 0.81% or 205 points as the tariff worries spooked investors.
According to the latest weekly data released by the Reserve Bank on Friday, the forex reserves fell by $3.049 billion to $699.736 billion in the week to July 4. Foreign currency assets also decreased, while gold and SDR reserves rose.
In the previous reporting week, the overall reserves had jumped by $4.849 billion to $702.784 billion. The reserves had touched an all-time high of $704.885 billion in the week to September 27, 2024.
For the week ended July 4, foreign currency assets, which are the largest components of the reserves, dropped by $3.537 billion to $591.287 billion, the data released on Friday showed. Expressed in dollar terms, the foreign currency assets include the effect of appreciation or depreciation of non-US units like the euro, pound and yen held in the foreign exchange reserves.
On the other hand, the gold reserves gained $342 million to $84.846 billion during the week, the RBI said, adding the special drawing rights (SDRs) with the World Bank also rose $39 million to $18.868 billion, while the country’s reserve position with the IMF too jumped $107 million to $4.735 billion.
With today’s loss of 15 paise, the rupee has depreciated by 0.36% against the greenback in the current financial year, and 0.19% down in the current calendar year.
The trouble for the rupee mounted after Us president Donald Trump said Thursday that he was planning a blanket 15-20% levies on all its trading partners. He also announced 35% tariffs on Canada, effective August 1, and warned of higher levies if Ottawa retaliated.
Another pain area for the rupee was a bleeding capital markets, along with higher gold and silver prices which weighed on sentiment, LKP Securities said. The high US tariffs on Brazil and Canada also added to the uncertainty, and markets will remain cautious until constructive trade talks emerge, it added.
Additionally, the dollar index has shown recovery, which has added pressure on emerging market currencies. The rupee is expected to trade in a 85.25086.20 range, the brokerage added. The dollar index, a measure of the greenback against a basket of six major currencies, rose 0.13% to 97.78.