Mumbai: Efforts by India’s central bank to arrest the depreciation in rupee value depleted the country’s foreign exchange reserves (Forex) by USD 1.40 billion in the week ended December 18.

According to the Reserve Bank of India’s (RBI) weekly statistical supplement, the Forex reserves stood at USD 351.10 billion for the week under review.

Market observers cited the central bank’s attempts to arrest the fall in the rupee’s value, as the main reason for the depletion in Forex reserves.

“The massive depletion in the foreign reserves can be attributed to the US dollar selling by the RBI to stabilise the rupee value,” said Anindya Banerjee, associate vice president for currency derivatives with Kotak Securities.

The rupee value had been dented during that week on account of the US Fed’s FOMC (Federal Open Market Committee) meet which decided to raise key interest rates, he said.

For the previous week ended December 11, the country’s foreign reserves had risen by USD 407.9 million at USD 352.50 billion. The rupee value was dented during the period preceding to the FOMC meet as foreign funds went on a selling frenzy in the domestic equity and debt markets.

On a weekly basis, RBI’s attempts paid-off as the rupee strengthened by 49 paise at 66.40 (December 18) to a US dollar from its previous close of 66.89 (66.8850) to a greenback (December 11). The data with stock exchanges showed that the FPIs (Foreign Portfolio Investors) bought stocks worth only Rs 19.4 crore in the week ended December 18.

Nevertheless, the FPIs had taken out Rs 23,352 crore during the period August-September. In November alone, the foreign investors off-loaded stocks worth around Rs 9,000 crore. The foreign currency assets (FCAs) which constitute the largest component of India’s Forex reserves dwindled by USD 1.36 billion to USD 328.26 billion in the week under review.

Apart from the US dollar, FCAs consists of nearly 20-25 percent of other major global currencies, securities and bonds. The individual movements of these currencies against the US dollar impact the overall foreign reserves’ value.

Notwithstanding the fall in overall Forex kitty, the country’s gold reserves remained stagnant at USD 17.54 billion. Gold reserves had plunged by USD 1.14 billion at USD 17.54 billion during the week ended December 4, as international prices crashed to a six-year low.

However, the special drawing rights (SDRs) were lower by USD 24.3 million at USD 3.99 billion.