MUMBAI: The pressure on the rupee continued to extract a toll on the forex reserves for the sixth consecutive week ending November 8—a week when the rupee was at its nadir plunging to the lowest level of 84.38 till then.
As the central bank sold more dollars to support the rupee, the reserves fell by USD 6.5 billion to USD 675.65 billion in the reporting week, a three-month low.
According to data released by the Reserve Bank on Friday, reserves have fallen by USD 29.2 billion from the September 27 peak of USD 704.89 billion, marking the sixth consecutive decline.
In the period for which the forex reserves data pertain, the rupee had weakened to its then-all-time low of 84.38, pressured by a surge in dollar strength and US bond yields following Donald Trump's victory in the US elections. The rupee lost more ground since then and closed at a new low of 84.405 on Thursday. The forex market was closed for a national holiday on Friday.
For the reporting week to November 8, the RBI said the reserves fell by USD 6.5 billion. In the previous reporting week, the forex reserves had dropped by USD 2.675 billion to USD 682.13 billion.
Changes in forex assets are caused by the central bank's intervention in the forex market and the appreciation or depreciation of foreign assets held in the reserves. The RBI intervenes on both sides of the forex market to prevent undue volatility in the rupee. The RBI's strong interventions helped the local currency avert deeper losses, traders said.
The data release showed that foreign currency assets, a major component of the reserves, decreased by USD 4.467 billion to USD 585.383 billion for 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.
Gold reserves also declined by USD 1.936 billion to USD 67.814 billion during the week, the RBI said, adding the country’s special drawing rights were down by USD 60 million to USD 18.159 billion. The reserve position with the IMF was also down by USD 14 million to USD 4.298 billion in the reporting week, the apex bank data showed.