According to analysts, the Indian reserves fell on the back of a rally in the US dollar and that major non-dollar currencies were trading at their weekly lows. The Indian reserves hold nearly 20-25 percent of the non-dollar currencies.
“The fall in foreign reserves can be attributed to a sharp rally in the US dollar. This had an effect on the major non-dollar currencies which were trading to their weekly lows,” Anindya Banerjee, senior manager, currency derivatives, Kotak Securities told IANS.
For the previous week ended March 6, the reserves had decreased by $286.3 million to $337.79 billion. However, for the week ended Feb 27, the total forex reserves had increased by $3.88 billion to $338.07 billion.
According to the RBI’s weekly statistical supplement, foreign currency assets, the biggest component of the forex reserves declined by $1.97 billion at $310.34 billion in the week under review.
The foreign currency assets had risen by $122.4 million at $312.32 billion in the week ended March 6. For the week ended Feb 27, the foreign currency assets had increased by
$3.90 billion at $312.20 billion.
The RBI said the foreign currency assets, expressed in US dollar terms, include the effect of appreciation or depreciation of non-US currencies such as the pound sterling, euro and yen held in reserve.
India’s reserve position with the International Monetary Fund (IMF) in the week ended March 13 decreased by $27.1 million and stood at $1.58 billion.
The value of special drawing rights (SDRs) was lower by $60.8 million in the week under review at $3.96 billion.
Gold reserves were static at $19.83 billion. The gold reserves had plunged by $346.2 million in the week ended March 6.