Forex Reserves fell by $1.7 billion at a slow pace in the week ending May 6

India’s forex reserves fell by 1.7 billion to around $596 billion for the week ended May 6, the day LIC of India’s initial public offer opened for general subscriptions. While the foreign currency assets dipped by nearly $2 billion, gold reserves were up by 135 million. This was the eighth consecutive contraction of forex reserves, now slipping below the $600 billion mark, which the central bank is aiming to protect. However, the pace of the fall reduced this time around.

“The reserves are likely to bounce back from next week onwards,” said a currency market analyst.

The Rupee turned wild from May 9 onwards with the LIC of India closing the subscription window. The local unit hit an all-time low first on Monday at 77.53 per dollar only to break the record on Thursday at 77.63. The central bank was seen intervening in the market via futures, non-deliverable offshore forwards and spot markets. Selling dollars in futures and overseas derivatives is primarily aimed at protecting the forex reserves.

The Rupee was a tad weaker Friday against the dollar. The local unit was at 77.45 per dollar versus 77.42 Thursday.