India’s forex reserves dropped by USD 5.693 billion to USD 634.585 billion in the week ended January 3, the Reserve Bank of India said on Friday.

In the previous reporting week, the overall kitty had declined by USD 4.112 billion to USD 640.279 billion.

The reserves have been on a declining trend for the last few weeks, and the drop has been attributed to revaluation along with forex market interventions by RBI to help reduce volatility in the rupee. The forex reserves had increased to an all-time high of USD 704.885 billion in end-September.

For the week ended January 3, foreign currency assets, a major component of the reserves, decreased by USD 6.441 billion to USD 545.48 billion, the data released on Friday showed.

Expressed in dollar terms, the foreign currency assets include the effect of appreciation or depreciation of non-US units like the euro, pound and yen held in the foreign exchange reserves.

This comes in the backdrop of increasing pressure on the rupee. The rupee declined 14 paise and touched the crucial 86.00-mark (provisional) for the first time against the US dollar on Friday as it failed to resist pressure from a stronger American currency and huge outflow of foreign funds.

Surging crude oil prices overseas and negative sentiment in domestic equity markets also weighed down the Indian currency, forex traders said.

Also, dollar strengthened on increased demand amid the anticipation of restrictive trade measures by the new US administration after Donald

Trump takes over as president on January 20.

At the interbank foreign exchange, the rupee opened at 85.88, hit the intra-day peak of 85.85 before settling at the lowest-ever level of 86.00 (provisional) against the greenback, 14 paise lower from its previous close.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.01 per cent higher at 109.01. The 10-year US bond yields also rose to its April 2024 level at 4.69 per cent.

India’s gold reserves increased by USD 824 million to USD 67.092 billion during the week, the RBI said.

The Special Drawing Rights (SDRs) were down by USD 58 million to USD 17.815 billion, the apex bank said.

India’s reserve position with the IMF was down by USD 18 million at USD 4.199 billion in the reporting week, the apex bank data showed.