The country's forex reserves have dropped below $400 billion in the first week of September for the first time since November 11, 2017. This is the second consecutive week of substantial fall in the reserves which indicates RBI's intervention to tame free fall of domestic currency, which has breached the 73-mark early this week. On Friday, the INR/ USD pair closed at 71.84.
Foreign exchange reserves stood at $399.28 billion as on September 7, declining by $819.5 million. In the previous reporting week, foreign exchange reserves declined by $1.191 billion to $400.101 billion.
One of the major components of forex reserves, foreign currency assets or FCAs, also fell by $887.4 million to $375.099 billion. FCAs expressed in dollar terms, includes the effect of appreciation/depreciation of non-US currencies such as the euro, pound and yen held in the reserves.
Gold valuation in the reserves, however increased in the reporting week after remaining stable for years, by $71.9 million to $20.2 billion. Nonetheless, the SDRs or special drawing rights with the IMF declined to $1.476 billion, down by $1.5 million. Further, as per the apex bank release the country's reserve position with the Fund also dropped by $2.5 million to $2.474 billion.
As RBI has further stepped up its intervention this week to tame the rupee and trade gap, forex reserves are likely to fall further.