Forex reserves snap four-week fall

The country’s foreign exchange reserves increased by $ 2.479 billion for the week ended December 2 after falling for four successive weeks. The rise in the reserves is mainly due to an increase of $1.315 billion in the bank's foreign currency assets and a $1.145 billion rise in the value of its gold holdings.

Foreign exchange reserves have fallen by 4.4 per cent after attaining a decadal high of $320 billion on September 2. During the same period, the rupee has depreciated by close to 12 per cent, despite intervention by the central bank to stem depreciation.

RBI data showed it intervened in the foreign exchange market to the tune of $845 million in September — the month when the rupee lost 6.25 per cent against the dollar. The central bank said it would use all tools available to prevent rupee fall if the deceleration escalated. However, the central bank also said it intervenes in the foreign exchange market to curb volatility and it did not target any particular level of rupee.

The rupee has depreciated about 17 per cent in the current financial year as investors flocked towards the dollar amid global uncertainty, mainly driven by the sovereign debt crisis in the euro zone. On Friday, the rupee weakened against the greenback and went back to 52 levels, thereby erasing most of the week's gains. the rupee closed at 52.03, lower by 28 paise as compared to the previous day's close and 82 paise as compared to the previous week's close. Strengthening dollar amid renewed concerns on the euro zone crisis coupled with weak domestic equity markets, led to depreciation in rupee on Friday.