Forex reserve falls below $400 billion mark

Kolkata: India's foreign currency reserves, which provides cushion against dollar outflows, fell below $400 billion mark as Reserve Bank of India continued selling dollars from its coffers to prevent the volatility in local currency.

Reserves dipped $820 million in the week to September 7 to $399.282 billion, RBI data showed. It dipped over $26 billion since April 13 when it was it it peak of $426.082 billion in tandem with the rupee depreciation.

Rupee hit its lowest closing level on September 11 at 72.69/70 against the greenback, reflecting 9.3% depreciation since April making its one of the worst performing emerging currencies.

RBI sold a tad over $8 billion (net basis) in spot market in June and July to ease the pace of rupee depreciation, according to official data.

Reserves around $400 billion provides import covers for about nine months.

"As the rupee has come under pressure after May, there has been drawdown of reserves to support the currency. There has also been sale of dollars by the RBI," CARE Ratings said in a report last week.

"However, the level of reserves at around $400 billion looks fairly satisfactory," the report said.

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