India's forex reserves slump by another $2.59 bn in week ending March 18

India's foreign exchange (forex) reserves dipped by $2.59 billion in the week ended March 18, recording a sharp drop for the second consecutive week as the Reserve Bank of India (RBI) heavily sold dollars to prevent slide in the value of rupee.

According to the RBI's weekly statistical supplement, the country's forex reserves slumped by $2.597 billion to $619.678 billion during the week ended March 18. The value of gold reserves as well as foreign currency assets declined sharply.

This is the second consecutive week of a sharp drop in the country's forex reserves.

For the week ended March 11, India's forex reserves had slumped by $9.646 billion, the sharpest decline in nearly two years. The sharp decline in the country's forex reserves coincides with the week during which the rupee hit an all-time low. The Indian rupee plunged to a record low of 77.02 against a US dollar on March 7.

The foreign currency assets, which is the biggest component of the forex reserves, fell by $703 million to $553.656 billion during the week ended March 18. The foreign currency assets had dipped by $11.108 billion in the previous week.

Expressed in US dollar terms, the foreign currency assets include the effect of appreciation or depreciation of non-dollar currencies like Euro, UK's Pound Sterling and Japanese Yen held in the foreign exchange reserves.

The value of gold reserves slumped by $1.831 billion to $42.011 billion during the week under review. The value of gold reserves had increased by $1.522 billion in the week ended March 11 due to a sharp increase in gold prices in the international markets.

The value of India's Special Drawing Rights (SDRs) with the International Monetary Fund (IMF) declined by $62 million to $18.865 billion. However, India's reserve position in the IMF remained unchanged at $5.146 billion during the week ended March 18, the RBI data showed.