Foreign exchange reserves as on February 26 fell by $3.57 billion from a week ago to $346.788 billion, according to data from the Reserve Bank of India.
This is the biggest weekly decline in reserves since August 2014 when it had fallen by $3.79 billion, Bloomberg data showed.
It is noteworthy that in days prior to the Budget, the rupee was close to its all-time lows, led by selloff by foreign investors, and market participants had indicated the RBI was intervening to keep the currency from falling further.
Foreign currency assets (FCAs), which form a key component of the reserves, fell by $3.55 billion from the previous week to $325.02 billion.
FCAs are maintained in major currencies such as dollar, euro, pound sterling, Japanese yen, etc. Foreign exchange reserves are, however, denominated and expressed in US dollar only.
Movements in FCAs occur mainly on account of purchase and sale of foreign exchange by the RBI in the foreign exchange market in India, income arising out of the deployment of the foreign exchange reserves, external aid receipts of the Central Government and revaluation of the assets.
Gold reserves, however, remained stable at $17.696 billion. Special drawing rights (SDR) from the International Monetary Fund fell by $7.4 million from the previous week to $1.479 billion. SDR is an international reserve asset created by IMF and allocated to its members in proportion of the members’ quota at the IMF.
The country’s reserve position in the IMF stood at $2.58 billion as on February 26, down $13 million from the previous week.
In the week-ended February 19, forex reserves had fallen by $1.46 billion to $350.365 billion.