After two weeks of consecutive fall due to plunging gold prices and international currency devaluations, India's foreign exchange (Forex) reserves gained $1.08 billion in the week ended August 14.
The reserves for the week under review stood at $354.43 billion after falling by $321.1 million since July 31.
For the week ended August 7, the reserves had declined by $113.5 million to $353.34 billion.
The data furnished by the Reserve Bank of India (RBI), in its weekly statistical supplement showed that the foreign currency assets (FCAs) rose by $1.03 billion to $330.83 billion.
The FCA which constitutes the largest component of Forex reserves includes nearly 20-25 percent of non-dollar currencies, securities and bonds bought abroad.
The major catalyst for the earlier FCA losses was the devaluation of yuan, intended to boost Chinese exports.
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China's central bank devalued yuan by two percent on August 11. This was the biggest devaluation of the Chinese currency since 1994.
The currency fell again by another two percent on August 12 panicking the world economy.
The move strengthened the dollar value, which has negatively impacted major world currencies including the Indian rupee.
The yuan has fallen by 4.6 percent till now since August 11.
"India Rupee continues to face the aftershock from the China led Forex and economic earthquake that is shaking world financial markets," Anindya Banerjee, senior manager for currency derivatives with Kotak Securities, told IANS.
As per Banerjee, the continuous slide in the rupee value which resulted in Friday's close of Rs.65.83, a new 2-year low and breaching of the Rs.66 to a dollar mark in futures markets unnerved investors.
"Financial markets have finally started paying attention to a slowing world economy and losing ability of central banks to prevent a debt-deflationary recession from taking hold," Banerjee elaborated.
According to him, the rupee's continued weakening against most major currencies, including the US dollar, presents a scenario of it dropping further to Rs.66.50-Rs.66.70 levels.
"We could see a range of Rs.64.50-Rs.66.50 to unfold, creating a launch pad for a move towards Rs.68-Rs.70 eventually," he predicted.
Earlier, the RBI was seen comfortable with the rupee ranging anywhere between Rs.63.20-Rs.64.30 per dollar. The apex bank that time used to sell dollars, whenever the rupee crossed the 64 mark and used to buy the greenbacks when it receded below 63.
During the week under review, the country's gold reserves were stagnant at $18.25 billion in the week under review. The reserves had plunged by $824.2 million in the week ended July 31.
The plunge in bullion reserve value came about after the international prices steadily declined as a result of the dollar gaining strength.
From a peak of $1,900 an ounce in September 2011, the spot gold price slumped to a five-year low of $1,086 an ounce on August 6, 2015.
However, the recent rise in gold prices from the sub-$1,080 an ounce levels to $1,165 in just a fortnight has the ability to stoke the Forex reserves in the coming week.
The special drawing rights (SDRs) in the period under review were higher by $35.4 million at $4.05 billion.
The country's reserve position with the International Monetary Fund (IMF) was up by $11.2 million to $1.29 billion.