Mumbai, Oct 19 (IANS) A strong US dollar and subsequent interventions by the country’s central bank to stabilise the rupee drained over $5.14 billion from India’s foreign exchange (forex) reserves, analysts said on Friday.
According to Anindya Banerjee, Deputy Vice President for Currency and Interest Rates with Kotak Securities, the decline in Forex reserves can be attributed to the RBI’s aggressive intervention in the spot market to stem the decline in rupee’s fall.
India’s forex reserves declined by $5.14 billion during the week ended October 12, when the rupee slipped to 74 and beyond against the US dollar.
On Friday, the Reserve Bank of India’s weekly statistical supplement showed that overall forex reserves decreased to $394.46 billion from $399.60 billion reported for the week ended October 5.
India’s forex reserves comprise foreign currency assets (FCAs), gold reserves, special drawing rights (SDRs) and the RBI’s position with the International Monetary Fund (IMF).
The RBI is known to enter the markets via intermediaries to either sell or buy US dollars to keep the rupee in a stable orbit.
Segment-wise, FCAs — the largest component of the forex reserves — plunged by $5.23 billion to $369.99 billion during the week under review.
Besides the US dollar, FCAs consist of nearly 20-30 per cent of major global currencies.
However, the RBI’s weekly statistical supplement showed that the value of the country’s gold reserves increased. It went up by $71.4 million to $20.52 billion.
As per the data, the SDRs’ value rose by $6.4 million to $1.47 billion, while the country’s reserve position with the International Monetary Fund (IMF) increased by $10.7 million to $2.47 billion.