Reserve Bank of India (RBI) data published Friday showed that foreign currency assets, or the biggest component of the reserves, increased $4.25 billion to $543.8 billion through the period in review. These assets are maintained as a multi-currency portfolio comprising major currencies, such as, US dollar, Euro, Pound sterling, Japanese yen, etc but expressed in dollar terms. Fluctuations in these assets cause changes to forex reserves.
The forex reserves had increased to an all-time high of $704.885 billion in end-September. From there, reserves have fallen gradually as the central bank dipped into the stockpile to provide a floor to the local currency that was roiled by a persistent sell-off in risk assets across the emerging markets.
On Friday, the Indian rupee settled at 87.4950 against US dollar, compared with 87.20 in the previous session. In February, the local currency fell 1%, logging its fifth straight monthly fall because of foreign portfolio outflows and increased hedging in the onshore and the non-deliverable forward market, Reuters reported.
