The country’s foreign exchange reserves fell sharply by $ 11.98 billion to $ 469.909 billion in the week ending 20 March 2020 due to sustained dollar supply by the Reserve Bank of India (RBI) to curb the rupee depreciation.
This is the biggest drop in a week in the last 12 years. Earlier in 2008, such a decrease in foreign exchange reserves had come down.
Foreign investors continued to withdraw funds from the domestic equity and debt markets amid uncertainties over the rapidly spreading coronavirus, reaching the all-time low of 76.15 per dollar on 23 March.
Last week, the country’s foreign exchange reserves had decreased by $ 5.346 billion to $ 481.89 billion. This is the first decline in the country’s foreign exchange reserves in the last six months. Earlier, there was a decline in foreign exchange reserves in the week ended 20 September 2019. At that time it was reduced by $ 388 million to $ 428.58 billion.
The week ending March 6 was at an all-time high
The country’s foreign exchange reserves rose by $ 5.69 billion to the all-time high of $ 487.23 billion for the week ended March 6. The decline in the week under review, ie, the week ending March 20, was attributed to the decline in foreign currency assets (FCA), which form a significant part of the total reserves. Foreign currency assets declined by $ 10.256 billion to $ 437.102 billion in the week under review.
Gold reserve also reduced
During this period, the gold reserve, which has been showing a boom for the past few weeks, decreased by $ 1.610 billion to $ 27.856 billion in the week under review. The Special Drawing Rights in the International Monetary Fund declined by $ 40 million to $ 1.409 billion during the week under review, while the country’s reserves in the IMF also decreased by $ 7.7 million to $ 3.542 billion.