Mumbai: Weakness in the US dollar slightly buoyed India's foreign exchange (Forex) reserves during the week ended January 22, experts said on Saturday.
However, the Forex coffers would have been heavier had it not been for the central bank's efforts to arrest the fall in the rupee's value.
According to the Reserve Bank of India's weekly statistical supplement, the overall Forex reserves grew by $355.1 million and stood at $347.56 billion for the week under review.
The foreign reserves' kitty had plunged by $1.72 billion to $347.20 billion for the week ended January 15.
Analysts attributed the minor gains on account of dollar revaluation against the other major global currencies.
"India's foreign exchange reserve rose by 0.1 percent primarily on account of a 1 percent decline in the value of the US dollar against major international currencies," Anindya Banerjee, associate vice president for currency derivatives with Kotak Securities said.
In addition, currency revaluation strengthened the foreign currency assets (FCAs) which is the largest component of India's Forex reserves. It grew by $371.7 million to $325.04 billion in the week under review.
Apart from the US dollar, the FCAs consist of nearly 20-30 percent of other major global currencies, securities and bonds.
The individual movements of these currencies against the US dollar impacts the overall foreign reserves' value.
According to Banerjee, the US dollar sales capped the gains made on account of currency revaluation during the period under review.
"RBI was active that week, selling US dollars, to stem the decline in the rupee. However, as much of the sales were focussed on the derivatives segment, it did not have had much impact on FX reserves," Banerjee noted.
Lately, the rupee has been on a downward trajectory due to heavy outflows of foreign funds from the equity and debt markets.
On a weekly basis, the rupee closed flat at 67.63 (January 22) to a US dollar from its previous close of 67.63 to a greenback (January 15).
However, it touched a 28-month low of 68.17 to a US dollar — its weakest level since early September 2013 during the intra-day trade on January 20.
The weakness in the rupee value indicates the massive foreign funds outflow from the Indian equity and debt markets.
This was evident as foreign portfolio investors (FPIs) were net sellers during the week under review.
The National Securities Depository Limited (NSDL) figures showed that the FPIs were net sellers during the week ended January 22, 2016. They divested Rs 8,836.59 crore or $1.30 billion in the equity and debt markets from January 18-22.
Additionally, data with stock exchanges disclosed that the FPIs sold stocks worth Rs 4,634.64 crore in the week under review.
Another market observe from New Delhi cited that in the medium term, RBI is seen comfortable with the rupee ranging anywhere between 67-68.50 to a US dollar.
Anything beyond or below this limit provokes the central bank to intervene by either buying or selling the greenback.
Nevertheless, the country's gold reserves were stagnant at $17.24 billion.
The gold reserves had diminished by $303.7 million to $17.24 billion during the week ended January 1.
Furthermore, the special drawing rights (SDRs) were lower by $12.5 million at $3.98 billion.