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MUMBAI: Forex reserves fell for the sixth consecutive week to a 10-month low of $625.9 billion as of Jan 10, declining by $8.7 billion in the week and $23.5 billion in five weeks. The decline – down $79 billion from an all-time high of $704.9 billion in late Sept – reflects RBI‘s dollar sales and a fall in the value of non-dollar holdings as the greenback gained globally.
The rupee, facing pressure from a strong dollar and exiting foreign investor settled at 86.61 on Friday, its steepest weekly drop in 18 months. Dealers speculated that RBI could enter into forex swaps (whereby it borrows dollars), to boost reserves and rupee liquidity.
