India’s foreign exchange reserves were depleted by $5 billion in the week ending July 1 as foreign portfolio investors continued to pull out of local stocks, sending the rupee below 79 to the dollar for the first time in history.
India’s central bank responded to the rupee’s slump with moves to attract capital inflows on July 6, but the measures will take time to offset the imbalance in demand and supply of the foreign currency, economists said.
According to RBI data, reserves stood at $588.314 billion as of July 1. Of this, foreign currency assets were $524.745 billion, while gold reserves were valued at $40.422 billion. The balance is kept at the International Monetary Fund as special drawing rights and reserves.
The fall in reserves has now surpassed nearly $55 billion from a peak of $642.453 billion recorded on September 3 last year. Since February, the central bank has spent more than $46 billion defending the currency.