India's foreign exchange reserves will fall much further.

According to a Reuters poll, India's depleted foreign exchange reserves are expected to reach their lowest level in more than two years by the end of 2022, as the Reserve Bank of India continues to shield the rupee against a strengthening dollar.

The RBI has decreased its foreign exchange reserves by about $100 billion, from a peak of $642 billion a year ago, to $545 billion, with more on the way in a fight that has so far failed to halt the rupee's plunge to a historic low against the dollar.

According to the median forecast of 16 economists polled by Reuters on September 26-27, those reserves are anticipated to fall by another $23 billion to $523 billion by the end of the year. If realized, it would be the lowest level in more than two years.

Estimates ranged from $500 billion to 540 billion.

That means the RBI will continue to deplete its foreign exchange reserves at a rate not seen since the 2008 global financial crisis, when they fell by about 20%.

In comparison to the taper-tantrum phase in 2013, when the US Federal Reserve dramatically cut government bond purchases, the US Federal Reserve has already burned through reserves at a much faster rate.

A decade later, India finds itself in a similar situation. Despite continuous dollar sales and forecasts for more, the rupee has lost about 10% of its value versus the dollar this year, reaching a record low of 81.95 per dollar on Wednesday.

"With the last gain we have seen in the rupee, I expect the RBI to continue intervening to perhaps not try and keep a particular level of the currency, but surely try to lessen volatility," says Sakshi Gupta, chief economist at HDFC Bank.

As the rupee's value falls and the current account deficit widens, "we will see even more interventions in the days ahead, resulting in a bigger drain on FX reserves by the end of this year."

A small number of experts in the survey warned that the growing current account deficit, which was expected to be the biggest in a decade by the end of the fiscal year, might cause overall FX reserves to fall more than expected in the future year.

One reason contributing to the depletion is the RBI's failure to hike interest rates as swiftly as the US Federal Reserve.

According to a separate Reuters poll, the Fed is now expected to hike rates by another 150 basis points in the coming months, bringing them from near-zero in March to 3.00-3.25%.

The RBI appears to be nearly finished, despite the fact that it only began raising rates in May and has only lifted the repo rate by 140 basis points. This cycle is expected to be increased by only 60 basis points more, with 50 due this week.

Anubhuti Sahay, senior economist at Standard Chartered, believes that "the RBI should reduce the amount of intervention sooner rather than later to allow the INR to trade more in line with fundamentals."

According to this remark, our foreign exchange reserves should be sufficient not only for the next six months, but also for the following two to three years.