Forex reserves fall for second week in a row, down $763 mn

The foreign exchange — forex — reserves fell by $763 million to $640.112 billion in the week ended November 12, according to data released by the RBI.

In the preceding week ended November 5, the reserves decreased by $1.145 billion to $640.874 billion. They had touched a lifetime high of $642.453 billion in the week ended September 3.

During the reporting week, the decline in the forex reserves was primarily on account of a slide in foreign currency assets (FCA), Reserve Bank of India’s (RBI) weekly data released Friday showed.

FCA, a major component of the overall reserves, dropped by $2.094 billion to $575.487 billion in the reporting week, according to the central bank data.

Expressed in dollar terms, the FCA include the effect of appreciation or depreciation of non-US currencies such as the euro, pound sterling and Japanese yen held in the foreign exchange reserves.

Gold reserves were up by $1.461 billion to $40.239 billion in the reporting week.

The special drawing rights (SDRs) with the International Monetary Fund (IMF) dipped $103 million to $19.184 billion.

The country’s reserve position with the IMF was down by $27 million to $5.201 billion in the week, as per RBI.

Falling forex reserves may cause issues for the government and the RBI in managing the nation’s external and internal financial issues.

Higher reserves are a big cushion in the event of any crisis.