Forex reserves dip by $950.9 mn on fall of foreign currency assets

Foreign exchange reserves declined by $950.9 million to $404.192 billion in July

The foreign exchange reserves declined by $950.9 million to $404.192 billion in the week to July 27, on account of a fall in the foreign currency assets, the RBI said on Friday.

In the previous week, the reserves had increased a marginal $67.7 million to $405.143 billion.

A higher forex kitty is an indicator of the health of the economy as it is the direct cover for imports. The longer the import cover, the better the external health of the economy. At $404 billion, the nation can take care of around ten months of imports.

Forex reserves had touched a record high of $426.028 billion in the week to April 13, 2018. The reserves had crossed the $ 400-billion mark for the first time in the week to September 8, 2017, but have since been fluctuating.

In the week under review, foreign currency assets, a major component of the overall reserves, dipped by $1.012 billion to $ 379.037 billion, as per the latest data from the central bank.

Expressed in the US dollar terms, foreign currency assets include the effect of appreciation/depreciation of the non-US currencies such as the euro, pound and the yen held in the reserves.

Gold reserves rose by $61.1 million to $21.201 billion in the reporting week.

The special drawing rights with International Monetary Fund (IMF) increased by $0.3 million to $1.479 billion.

The country's reserve position with the IMF also rose $0.5 million to $2.474 billion, the apex bank said.