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Rising dollar strength drags down India’s foreign reserve

A rise in US dollar strength depleted India's foreign reserve by over $2 billion during the week that ended on March 25.

IANS

Mumbai: The foreign currency assets (FCAs) got negatively impacted due to the rising US dollar strength against other global currencies.The FCAs consist of global currencies and securities such as US treasury bonds.

On a weekly basis, FCAs, the largest component of the forex reserves, edged lower by $3.202 billion to $550.454 billion. As per RBI data, India's overall forex reserves fell to $617.648 billion from $619.678 billion reported for the previous week.

The country's forex reserves consist of FCAs, gold reserves, SDRs, and the country's reserve position with the IMF.

However, the value of the country's gold reserves increased by $1.230 billion to $43.241 billion.

On the other hand, SDR value fell by $44 million to $18.821 billion.

The country's reserve position with the IMF also slipped by $14 million to $5.132 billion.

"The value of US dollar has risen, this has pulled down the value of other currencies including GBP and Euro which are also held in the reserve," said Sajal Gupta, Head Fx & Rates, Edelweiss.

"Also the value of US bonds held in the reserve went down due to rise in US yields, thereby, reducing the overall reserve value."

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