The central bank has spent over $110 billion in a desperate attempt to check rupee’s slump against the greenback. However, the local unit dropped to an all-time low last month, breaching past the 83 per dollar level, while the foreign exchange reserves had dropped to an over two-year low.

The CEA’s comments are also seen as the first official government comment since concerns about waning currency reserves emerged earlier this year.

The foreign exchange reserves had fallen to their lowest level since July 2020 to $524.52 billion for the week ending Oct 21. The spot forex reserves are still sharply down from $607 billion in end-March and from the record high of $642.45 billion seen on September 3 last year.

It rose by $6.56 billion to $531.08 billion for the week ending Oct 28, logging their biggest weekly jump since September 2021 and also rose for the first time in three weeks for the week ended October 28. The forex reserves have depleted for 11 weeks out of 13 and the rise reported last week was likely due to softer dollar and changes in the central bank’s forward book, according to economists.

Meanwhile, the Indian rupee hit a more-than-one-month high today.

While analysts have flagged the risks of further depletion in the reserves, Reserve Bank of India Governor Shaktikanta Das has said the central bank’s forex reserves umbrella has continued to remain strong despite uncertainty in markets. He said the RBI has been intervening in the forex market based on continuous assessment of the prevailing and evolving situations.

“We should augment foreign exchange reserves and that will help with any contingencies,” the chief economic adviser said.

Nageswaran said the the world’s fifth largest economy has adequate reserves to deal with capital outflows. Financing India’s trade deficit will be the primary challenge for the year even as there are signs of broader economic recovery, he added.