India's forex reserves have plummeted by over $80b since Ukraine crisis to 2-year low

In a development that would concern the economic experts, India's forex reserves have plummeted by more than $80 billion (£69.3 billion) since the outbreak of the war in Ukraine earlier this year, with a decline of over $2 billion (£1.73 billion) in the latest week as the Reserve Bank of India (RBI) sold dollars to shore up rupee from violating the 80-per-dollar mark.

The latest weekly statistical data from the RBI showed that the forex reserves have fallen $2.234 billion (£1.93 billion) to $550.871 billion (£484.2 billion) in the week ending September 9. from $553.105 billion (£479.4 billion) in the week before, which was the lowest in almost two years.

India has seen its import cover falling for six consecutive weeks and 23 out of 29 weeks since Russia launched its military mission in Ukraine in late February, reflecting its central bank's drawing down from the reserves to tackle a surge in the US dollar because of capital outflows into assets dominated by it.

According to an NDTV report, a widening current account deficit has not helped in stopping the fall in the forex reserves despite a steady flow of foreign capital into India's markets.

The Indian rupee has crashed alarmingly this year from about 74 against the dollar to a record low of over 80 mark, resulting in the RBI stepping in.

On Friday, Indian shares crashed with equity benchmarks erasing gains for the week and extending their losses. This suggests the RBI drawing down more from the reserves to protect the rupee.