India's foreign exchange reserves slumped by USD 5.71 billion to USD 308.62 billion for the week ended Nov 18 due to depreciation in the value of non-dollar currency holdings and RBI's planned intervention to control rupee slump, official data showed.
The forex reserves kitty has dropped by USD 11.76 billion during the last three weeks under review, the sharpest three-week fall since the 2008 global financial and economic crisis. The kitty had dropped by USD 326 million and USD 5.72 billion respectively in the previous two weeks. The main reason for the drop is the slump in the value of non-dollar assets. Foreign currency assets, the biggest component of the forex reserves kitty, plunged by USD 5.71 billion to USD 274.57 billion for the week ended Nov 18, according to the weekly statistical supplement of the Reserve Bank of India (RBI).
The RBI does not provide any reason for the change in the foreign currency assets. It says the 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. During the last few weeks, the US dollar has appreciated against most currencies. Dollar appreciation leads to decrease in the value of other currencies held in the reserve. Indian rupee has depreciated sharply in the last one month. Rupee hit a record low of 52.73 against US dollar Nov 23.
The Reserve Bank of India (RBI) is suspected to have sold dollar to manage the valuation of the currency. However, there is no official confirmation on the quantum of intervention by the central bank in the currency market. There were marginal changes in the value of other components of the foreign exchange kitty. India's reserves with the International Monetary Fund (IMF) fell by USD 1 million to USD 2.62 billion and the value of special drawing rights (SDRs) also dropped by USD 1 million to USD 4.53 billion. However, the value of gold reserves remained unchanged at USD 26.89 billion.