Forex reserves fall $2.23 billion in a week, at 39-month low

The total forex reserves were at $275.49 bn on August 30

India's forex reserves have fallen to a 39-month low, according to the latest data released by the Reserve Bank of India (RBI).

The total forex reserves were at $275.49 billion on August 30. Reserves fell by $2.23 billion during the week. The last time the forex reserves were at $272.7 billion was on the week ended June 11, 2010.

Foreign currency assets, which form a substantial part of the reserves, fell by $3 billion. However, the fall got compensated a little as the value of gold held by the RBI increased by $977 million after the monthly revaluation.

The country's reserve position at the International Monetary Fund (IMF) decreased by $112.5 million to $1.9 billion, while special drawing rights from the IMF increased by $7.2 million to $4.3 billion.

According to a currency dealer, the fall in reserves was partly due to the RBI's intervention in the forex market and partly due the revaluation of currencies. The central bank, apart from dollars, also holds pounds, euros and Japanese Yen. However, their values are expressed in dollar terms. Capital flows are also less as foreign institutional investors are pulling out from Indian markets, said this dealer.

The RBI has been consistently intervening in the forex market to stop the rupee's slide. In the week ended August 30, the rupee had weakened 3.72 per cent to close at 65.71 against the dollar.