Forex reserves fall by $3.43 bn to $351.92 bn

Slide due to central bank's intervention for correcting volatility in rupee

The Reserve Bank of India (RBI)’s foreign exchange (forex) reserves fell by $3.43 billion for the week ending August 28 to $351.92 billion, the steepest fall over one year, data released on Friday showed.

The last time forex recorded such  fall was in the week ending August 22, 2014 , by $3.8 billion to $318.58 billion.

 

Foreign currency assets, a key component of, fell $3.4 billion to $328.31 billion. According to currency dealers, the fall was due to interventions by RBI and the change in valuation of the reserves. After China announced devaluation of the yuan last month, the rupee weakened sharply.

At that time, RBI intervened several times to reduce the volatility in the rupee against the dollar.

Gold reserves remained unchanged at $18.25 billion. In the same period, Special Drawing Rights fell $7.1 million to $4.07 billion, while India's reserve position with the International Monetary Fund stood at $1.30 billion, recording a fall of $2.3 million.

On Friday, the rupee ended at 66.47 to a dollar, compared to the previous close of 66.24. According to currency dealers, the weakness in the rupee was due to outflows from domestic markets and dollar buying by companies.

Depreciation spree in the rupee might continue in the next week. The two-day meeting of the US Federal Open Market Committee is scheduled for September 16 and 17. There are concerns in the Street that the US Fed might start increasing interest rates from near-zero, where they have been at since late 2008.