The Reserve Bank of India's foreign exchange reserves fell $1.46 billion as of February 19 from a week earlier, marking the first weekly fall in five, as the central bank was seen as selling dollars to prevent the rupee from hitting a record low. Foreign exchange reserves stood at $350.4 billion for the week ending February 19, down $1.46 billion from the previous week; and its first weekly fall since January 22, according to central bank data on Friday.
The rupee is dangerously close to touching a record low after heavy sales by foreign investors in debt and shares. On Friday, the rupee fell as low as 68.79 per dollar, not far from an all-time low of 68.85 hit in August 2013, when the country was in the middle of its worst currency crisis in more than two decades.
RBI Governor Raghuram Rajan said the central bank will only step in to prevent excessive volatility, and said the RBI did not have a policy to target a value for the rupee. "Primarily, it is due to intervention and the RBI is maintaining a gradual depreciation for the currency," said Rupa Rege Nitsure, group chief economist, L&T Finance Holdings, explaining the likely reason for the fall in weekly FX reserves. The Indian rupee has fallen about 3.7 percent against the dollar and is the second worst performer in Asia so far this year, among the currencies tracked by Reuters. The RBI expressed confidence about India's economic fundamentals, while the country's FX reserves are not far from a record high of $355.4 billion, that hit in August.
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