Indian Foreign Exchange Reserves (Oct/16) 721.02B (Prev. 726.03B)

Indian Foreign Exchange Reserves (Oct/16) 721.02B (Prev. 726.03B)

The RBI's weekly reserve print is one of the more routine Asian data points, and week-to-week moves of this size sit well within the range typically explained by valuation effects on the non-dollar portion of the stock rather than fresh intervention. The distinction that matters in reading these prints is between revaluation noise, where moves in the dollar, gold and bond prices do the work, and genuine spot sales, which historically show up as repeated weekly drawdowns coinciding with visible rupee pressure and tight onshore forward premia. Episodes where the RBI has actively defended the currency have tended to feature a stepped, sustained decline in the stock alongside a swelling net forward short position, disclosed with a lag; a single modest decline does not fit that pattern. The reserve level remains high by import-cover standards, so the stock itself is not a funding constraint; the signal value lies in the trend, not the level. The follow-ons are the next few prints for persistence, the forward book data, and whether USD/INR has been pressing the upper end of the range the RBI has historically been willing to tolerate.