The country's foreign exchange reserves fell for the first time in almost six months to USD 481.89 billion in the week ended March 13, after touching a record high of USD 487.23 billion, according to weekly data released by the Reserve Bank of India.
In the reporting week, the reserves declined by USD 5.35 billion. It had touched a life-time high of USD 487.23 billion in the week to March 6, after it rose USD 5.69 billion.
The last time forex reserves declined was in the week to September 20, 2019, when it had fallen by USD 388 million to USD 428.58 billion.
The fall in forex reserves in the week to March 13 was on account of decrease in foreign currency assets (FCA), a major component of the overall reserves. FCA declined by USD 3.78 billion to USD 447.36 billion in the reporting week.
Expressed in dollar terms, the foreign currency assets include the effect of appreciation or depreciation of non-US units like the euro, pound and yen held in the foreign exchange reserves.
Bankers attributed the dip in reserves to higher supply of dollars by the RBI into the market which has been weakening against the US currency following heavy outflow by foreign portfolio investors (FPIs) from the domestic market.
"FPIs are becoming risk averse due to the growing uncertainty over the spread of the novel coronavirus pandemic and its impact on the economy. They are pulling out funds which are weakening the rupee. The intervention by the RBI is to arrest fall in the rupee," said a banker.
On Friday, the rupee ended at a life-time low of 75.20 against the US dollar after opening at 74.82.
Foreign investors remained net sellers in the Indian capital markets as they pulled out more than Rs 4,622.93 crore on Thursday, markets data showed.
The gold reserve, which was rising for the past many weeks, decreased by USD 1.53 billion to USD 29.47 billion in the reporting week, the RBI data showed.
The special drawing rights with the International Monetary Fund (IMF) were up by USD 2 million to USD 1.45 billion.
The country's reserve position with the IMF dipped by USD 38 million to USD 3.69 billion, the data showed.