Punjab, Oct. 9 -- India's foreign exchange reserves fell by 12.95 billion dollars in the week to 2 October, to 734.61 billion - one of the largest single-week drops on record, and a direct measure of what defending the rupee is now costing.
Where the money went
Foreign currency assets fell about 10.664 billion dollars and gold holdings about 2.288 billion. Part of any weekly move is valuation - reserves are reported in dollars, so a stronger dollar shrinks the euro, yen and sterling holdings without a single transaction. But a drop of this size in one week, in a week when the RBI was visibly selling dollars, is not mostly arithmetic.
Reserves are still 34.6 billion dollars higher than a year ago. They are also now well below the record 7...