Forex reserves fall by $3 bn to $277 bn

In the week ending July 26 foreign exchange reserves had recorded a rise of $960.2 million to $ 280.16 billion

India’s foreign exchange reserves fell by almost $3 billion to $277.17 billion for the week ended August 2, the lowest level in over three years, the Reserve Bank of India (RBI) data released on Friday showed. The previous occassion when the foreign exchange reserves had reached this level was in the week ended June 25, 2010.

In the week ending July 26, the reserves had recorded a rise of $960.2 million to $280.16 billion.

According to the weekly statistical supplement of the central bank, the fall in the reserves was due a sharp decline in foreign currency assets, which form a substantial part of the reserves. These dropped by $2 billion during the week ended August 2 to $ 249.90 billion.

Currency dealers feel this is because the central bank has been intervening in the foreign exchange market to arrest the fall in the rupee against the dollar and fresh inflows are not coming in to compensate for the dollar sale by state-run banks on behalf of RBI. Earlier this week, the rupee had touched an all-time low of 61.81 against the dollar.

During the week, gold reserves fell $808.5 million to $20.75 billion. For the week under review, Special Drawing Rights (SDRs) dropped by $21.4 million to $ 4.35 billion.

The reserve position at the International Monetary Fund fell by $11 million to $2.17 billion.