The Indian Rupee has had the best week in more than a month, but the weakness before that against the US dollar's strength, affected the country's forex reserves. Assets such as foreign currency and gold, which form a bulk of forex reserves, are often sold by the central bank to break the fall of the domestic currency.
After snapping a three-week winning streak in the week that ended on May 19, foreign exchange reserves dropped for the second straight week as of May 26.
With this $4.34 billion dip, the reserves hit a monthly low of $589.14 billion, although the drop was less than a $6 billion fall in the week before that.
The weight of foreign currencies
The dollar's rise causing a depreciation in other currencies also weighed in on the forex reserves maintained by the Reserve Bank of India.
A bulk of the drop was caused by the depletion of foreign currency assets, which went down by $4.01 billion to hit $520 billion.
At the same time gold in the RBI's kitty dipped by $225 million to fall below $45 billion in the forex reserves.
The data comes days after forex gains worth Rs 1.6 lakh crore drove up RBI's income by 47 per cent in FY23.
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