The country’s foreign exchange reserves declined by $7.541 billion to $572.712 billion in the week ended July 15 as the Reserve Bank continued to intervene in the market to curb the fall of the rupee. In the previous week ended July 8, the reserves shrunk by $8.062 billion to $580.252 billion, the Reserve Bank of India (RBI) data showed on Friday.
On Friday, the rupee fell by 5 paise to close at 79.90 against the US dollar. It had touched an all-time intra-day low of 80.06 against the US dollar on Thursday.
During the reporting week ended July 15, the fall in the reserves was on account of a decline in the Foreign Currency Assets (FCAs), a major component of the overall reserves, and also in the gold reserves, the central bank said.
FCAs fell by $6.527 billion to $511.562 billion in the reporting week, according to the Weekly Statistical Supplement released by RBI. Expressed in dollar terms, FCAs include the effect of appreciation or depreciation of non-US units like the euro, pound and yen held in the foreign exchange reserves.
Gold reserves decreased by $830 million to $38.356 billion in the reporting week. The Special Drawing Rights (SDRs) with the International Monetary Fund (IMF) declined by $155 million to $17.857 billion, RBI said. The country’s reserve position with the IMF decreased by $29 million to $4.937 billion in the reporting week.
Earlier in the day, the RBI Governor Shaktikanta Das said there was a genuine shortfall of supply of foreign exchange in the market relative to demand because of import and debt servicing requirements and portfolio outflows.
He said the central bank has been supplying US dollars to the market to ensure that there is adequate foreign exchange liquidity. “After all, this is the very purpose for which we had accumulated reserves when the capital inflows were strong. And, may I add, you buy an umbrella to use it when it rains!,” Das said.