The country’s foreign reserves fell by $2.39 billion to a three-month low of $560.003 billion in the week to March 10, the Reserve Bank said in its latest weekly data.
In the week to March 3, stocks rose by $1.46 billion to $562.40 billion.
On an annualized basis, RBI reserves declined by $47.31 billion during the week under review, while on a fiscal year-on-year basis, the figure declined by $62.23 billion.
With this erosion, the forex kitty hit its lowest level since early December, according to the weekly statistical supplement released by the RBI on Friday.
The loss in reserves is due to a revaluation of foreign exchange assets from $2.2 billion to $494.86 billion in the week to March 10.
During the year, the value of foreign exchange assets decreased by USD 45.86 billion, and in terms of the financial year, they lost USD 59.49 billion.
Foreign currency assets denominated in dollars include the depreciation or devaluation effect of non-US units such as the euro, pound and yen in foreign currency reserves.
Reserve losses are primarily related to RBI’s sale of dollars to stem rupee volatility in the spot and forward markets to prevent runaway exchange rates.
Last week, the rupee was flat and lost 10 basis points against the dollar and the currency was trading in a range of 81.61-82.29. The rupee ended at 82.55 on Friday.
The country’s gold reserves and SDR holdings also declined during the week under review, with both reserves falling by USD 110 million and USD 53 million, respectively. Gold reserves and SDR holdings amount to USD 41.92 billion and USD 18.12 billion, respectively.
The country’s reserve position in the IMF also decreased by 11 million dollars and reached 5.1 billion dollars.
Reserves fell from their peak as the rupee came under pressure and the monetary authority took measures to protect the rupee from extreme volatility. In 2022, the cost of protecting against a falling rupee would be over $115 billion in reserves.
The worst decline came in the week to Feb. 10, when stocks fell sharply by $8.32 billion to $566.95 billion.
In October 2021, the forex kitty reached an all-time high of $645 billion.
(Except for the headline, this story was not edited by NDTV staff and was published on a syndicated channel.)