Forex reserves fall nearly $4 billion in three weeks

Kolkata: India's foreign exchange reserves fell for the third straight week to $398.795 billion amid concerns that tightening of global financial markets may prompt foreign investors pull out their investments from local equities and debt in the coming months.

Reserve Bank of India's data showed that forex reserves dipped by $862 million in the week ending October 6 to $398.795 billion.

Although RBI does not give reasons for the rise and fall of reserves, analysts said that the last week's dip reflected the fall in valuation of reserves held in other global currencies.

Forex reserves fell by nearly $4 billion in the last three weeks after it touched the all time high at $402.509 billion.

The rupee closed 22 paise higher to 64.86 against the US dollar Friday as the lower-than-expected consumer price index at 3.28% for September and rise in the index of industrial production to a nine-month high of 4.3% in August improved investors' sentiment.

But the forex flows could be tight in the next few months as the US Federal Reserve is expected to raise its policy rates in December while European Central Bank's has already decided to reduce quantitative easing, analysts said.