India’s foreign exchange reserves declined by $819.5 million to stand at $399.3 billion in the week ended September 7, going a shade below the $400-billion mark for the first time in over a year.
This dip in reserves comes in the wake of the rupee depreciating by 74 paise during the week to close at 71.74 to the dollar as on September 7 in the backdrop of an escalating tariff war between the US and China, rising global crude oil prices and concerns on India’s widening current account deficit (CAD).
Since March-end 2018, India’s forex reserves have dwindled by $25.3 billion.
The decline in reserves last week was mainly on account of the foreign currency assets (FCA) component coming down by $887.4 million.
Movements in the FCA occur mainly on account of purchase and sale of foreign exchange by the RBI, income arising out of the deployment of the foreign exchange reserves, external aid receipts of the Central government and changes on account of revaluation of the assets.
The gold component of the reserves, however, was up $71.9 million, indicating that at a time when the global financial markets have become volatile, the RBI is accumulating gold. The other two components of the reserves dipped marginally — special drawing right (down $1.5 million) and reserve position in IMF ($2.5 million).