Forex reserves drop by $1.74 billion

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SME Times News Bureau | 02 Jun, 2012
India's foreign exchange reserves fell by $1.74 billion to $290 billion for the week ended May 25, the Reserve Bank of India (RBI) data showed Saturday.

The reserves registered a sharp drop for the fourth week in a row, largely due to suspected sale of dollar by the central bank to defend rupee, according to the data.

The forex reserves had declined by $1.80 billion, $1.37 billion and $2.18 billion, respectively, in the previous three weeks.

Foreign currency assets, the biggest component of the forex reserves kitty, fell by $1.71 billion to $254.40 billion during the week ended May 25, according to RBI's weekly statistical supplement.

The RBI did not provide any reasons for the change in foreign currency assets.

It said the assets expressed in US dollar terms included the effect of appreciation or depreciation of non-US currencies such as the pound sterling, euro and yen held in reserve.

However, the RBI is understood to have sold dollars from the reserves to curb the slide in the value of rupee.

The Indian rupee slumped to a record low in recent weeks and stood 55.54 against a dollar Friday. The rupee witnessed loss for the ninth consecutive week, the longest losing streak since the 2008 economic crisis.

The value of special drawing rights fell by $18.6 million to $4.38 billion, and India's reserves with the International Monetary Fund fell by $12.1 million to $2.85 billion.

The value of gold reserves remained unchanged at $26.61 billion.