India’s Forex Reserves Tanks By 4.5 Billion Dollars And RBI’s Push For The Removal Of Illegal Forex Websites Begin:
India’s Forex reserves tanked by a net total of 4.53 billion USD, as the major component of the reserves, being Foreign Currency Assets (FCAs), dipped by a total of 3.5 billion USD. The gold reserves, Special Drawing Rights (SDRs) and position with the International Monetary Fund (IMF) also suffered a loss of around 1 billion.
The low performance of muted domestic assets, inflated oil prices and other external factors like rate hikes by the Federal Reserve combined with the crude oil prices increasing by 0.45%, further deprecated the currency. This week it plunged by 24 paise coming to a standstill of 75.39 against the greenback. The damage was contained by the RBI as they kept the benchmark for lending rates the same. They have stated that they will maintain an accommodative stance to make sure the reserves are able to stabilize and grow again.
The Rupee was stated to be the worst performing Asian currency after the divergence of policies and risk averse objectives said by Dilip Parmar, a research analyst for HDFC Securities. The expected 50 bps hike by the U.S. Federal Reserve after a 40 year high inflation print was seen to eliminate the risk appetite. Thus giving the Dollar a required push after its recent difficulty with it’s balance sheet trimming. Our muted domestic equities also seem to be tumbling as well, as the Sensex ended 773.1 points lower, leaving it at a timid 58,152.9. Meanwhile the Nifty settled down 231 points to 17,374. 75.
The RBI’s recent push for the blacklisting of illegal and unauthorized Forex trading websites has come into action. As they have requested the Ministry of Electronics and Information Technology to explore the possibility of blacklisting websites. Other prominent websites like Apple, Google and Microsoft have been asked to remove such websites and apps which are in violation of the Indian Laws for Forex trading.
Further actions have been delegated to the Directorate of Enforcement (DOE) to investigate the situation further, they plan to completely aid the DOE in trying to limit scamming and illegal transactions in the market. The central bank has issued a warning to the public stating that trades under illegal domains and mediums are liable to penal actions under the Foriegn Exchange Management Act.
Written and collated by Arjun Kulkarni
Written with input from The Business Standard, The Economic Times and Times New Of India