Foreign exchange reserves fell by $1.3 billion for the week ended January 6 to $561 billion, data released by the Reserve Bank of India (RBI) on Friday showed. The decline was mainly on account of a $1.7-billion fall in foreign currency assets, which was partly offset by an increase of $461 million in gold assets.
Forex reserves are on a decline for the past few weeks, except for a minor increase of $44 million in the week ended December 30. In the past four weeks, forex reserves fell by $2.5 billion.
On a year-on-year basis, the reserves are down by $71.1 billion. While compared to March 30, they are down $45.7 billion. In contrast, forex reserves had increased for five consecutive weeks in November.
Forex reserves are impacted mainly due to the movement in the dollar and the intervention of the RBI in the currency markets. The strengthening of the dollar impacts other currencies held by the RBI in its coffers and are expressed in dollar terms. The currencies include pound sterling, yen and euro.
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Around 67% fall in the forex reserves was on account of currency fluctuations, RBI governor Shaktikanta Das had said earlier.
The rupee ended 0.3% lower on January 6 on account of foreign fund outflows and gains in the dollar, led by the US labour market data. The fall in the rupee was cushioned by weak crude oil prices, an analyst at brokerage Sharekhan said.