India’s Forex Reserves plunged by 1.74 Billion Dollar to 290 billion dollar

According to the data released by the Reserve Bank of India (RBI) on 2 June 2012, India’s foreign exchange reserve plummeted by 1.74 billion dollar to 290 billion dollar for the week ended 25 May 2012. The RBI data displayed a sharp decline in the country’s forex reserves for the fourth consecutive week. The forex reserves had dropped by 1.80 billion dollar, 1.37 billion dollar and 2.18 billion dollar, respectively, in the previous three weeks.

The drop in forex reserve is largely due to sale of dollar by the central bank to defend consistently falling rupee. The Indian rupee plunged to a record low in recent weeks and stood 55.54 against a dollar on 1 June 2012. The rupee fall for the nine consecutive weeks is the longest losing streak since the 2008 economic crisis. RBI had reportedly sold dollars to arrest the further fall of Indian rupee.

The value of gold reserves of the country for the week ended 25 May 2012 remained unmoved at 26.61 billion dollar.