India's foreign exchange reserves fell by about $6.7 billion to $564 billion in the week ended Aug. 19, according to weekly data released by the Reserve Bank of India on Friday.
The fall in reserves was largely driven by a $5.78 billion drop in foreign currency reserves, the data showed. Gold reserves too fell by $704 million.
According to the head of treasury of a mid-sized private bank, there has been a drop in the value of gold, leading to the drop in reserves. The RBI has also been actively intervening in the forex market, to stop the rupee from hitting 80 against the dollar, the banker said on the condition of anonymity.
However, the main reason behind this drop has been the fall in euro, sterling pound and yuan values against the dollar, he said.
“In the August 12-19 week, the dollar index has risen by about 2% which has resulted in a sharp correction in other foreign currencies, leading to a fall in reserves,” said Anindya Banerjee of Kotak Securities.
On Friday, the rupee closed at Rs 79.87 against the dollar, unchanged from its previous close.
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