As per the RBI data, foreign exchange of India declined for the second consecutive week to $398.761 billion on the backdrop of tightening monetary easing in the world markets.
The US Federal Reserve is likely to increase its base rate in the month of December when Bank of England has already raised rates by 0.25%. In the week ended October 27, the reserves of the central bank fell by as much as $1.160 billion.
The traders attribute this shrinkage in forex reserves to RBI's stance of selling more dollars in comparison to what it purchased over the last fortnight. The decline is further due to fall in value of reserves maintained in other global currencies such as the pound sterling or Euro. Though clear reasons for the fall in forex have not been stated by the RBI.