With the Reserve Bank of India engaged in a battle to salvage the rupee through dollar sales,Indias foreign exchange reserves have shrunk to a three-year low of $275 billion. Foreign currency assets have fallen by $3 billion during the week ended August 30 when the rupee fell close to the 69 level and the RBI had to sell dollars to prevent a collapse of the currency.
With this,foreign currency assets have plunged by $12.32 billion to $247 billion since April 2013,the biggest fall in recent times. When the rupee came under pressure,the RBI sold dollars from its forex kitty to save the currency.
The rupee has fallen over 25 per cent this fiscal as foreign investors started exiting from India and other emerging markets after the US Federal Reserve announced its plan to reduce stimulus measures and Indias current account deficit came under intense pressure.
Planning Commission Deputy Chairman Montek Singh Ahluwalia ruled out seeking external assistance unless there is a radical change in the situation.