Foreign reserves drop $15.5 billion in steepest ever fall

India’s foreign exchange reserves for the last fortnight have dropped by more than $10 billion each week. For the week ended October 24, RBI data shows that reserves slipped $15.5 billion, or 5.65%—the largest drop ever—to $258.4 billion.

The decline was a result of major intervention by RBI in forex markets and a fall in the valuation of reserves as the euro slipped against the dollar. Due to the RBI measures, on Friday the rupee closed at 49.44/6 against the dollar, an improvement of 23 basis points. Last Friday, the euro fell to its lowest level in two years against the dollar, while the UK pound traded at a five-year low.

“The change in foreign currency assets is partly because of changes in the value of the dollar against the euro, yen and other currencies during the period,” RBI’s weekly statistical supplement noted. In the first three weeks of October, India’s foreign exchange reserves dipped $32.50 billion, on top of a fall of around $5.4 billion in September.

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