India’s foreign exchange reserves declined by $249 million to $249.27 billion for the week ended February 27, 2008 on revaluation of global currencies like the euro and pound sterling against the US dollar, and liquidation of Indian investments by foreign investors.
Foreign currency assets (FCAs) declined by $1.10 billion to $238.71 billion, according to the Weekly Statistical Supplement released by the Reserve Bank of India.
The value of gold reserves, however, rose by $862 million to $9.74 billion due to revaluation of gold in the apex bank’s kitty.
Foreign currency reserves have now declined by $60.44 billion since the end of March 2008, and they are down by $6.04 billion since the end of December 2008. Overseas investors had liquidated a substantial part of their holdings in Indian securities, and the apex bank had also sold dollars in a big way to contain volatility in the currency market. These are the two crucial factors that caused sharp drops in the foreign exchange reserves, analysts said.