Mumbai, Jan 9 (IANS): A strengthening US dollar and selling activity by the country's central bank plunged India's foreign exchange reserves (Forex) kitty by $1.68 billion, experts said on Saturday.

According to the Reserve Bank of India's (RBI) weekly statistical supplement, the overall Forex reserves stood at $350.36 billion for the week ended January 1.

The foreign reserves' kitty had swelled by $943.4 million to $352.04 billion for the week ended December 25.

Market observers pointed-out that strengthening US dollar on account of a recent rate hike by the US Fed and weak global macros had put pressure on the Forex treasury. 

"The forex valuation seems to have negatively impacted the reserves. The US dollar index had risen by around one percent in that week," Anindya Banerjee, associate vice president for currency derivatives with Kotak Securities, told IANS.

In addition, the foreign currency assets (FCAs) which is the largest component of India's Forex reserves declined by $1.36 billion to $327.82 billion in the week under review. 

Apart from the US dollar, the FCAs consists' nearly 20-25 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 other analysts, the depletion in the FCA can be attributed to the central bank's attempts to arrest the fall in the rupee's value during the week ended January 1. 

"RBI's selling activities could have attributed to this fall. The central bank has been very active in its attempts to keep the rupee in a stable range," an analyst told IANS.

The analyst elaborated that on a medium term, the RBI is seen comfortable with the rupee ranging anywhere between 66-67 to a US dollar. 

Anything beyond or below this limit provokes the central bank to intervene by either buying or selling the greenback. 

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, RBI's attempts paid-off as the rupee strengthened by 7 paise at 66.14 (January 1) to a US dollar from its previous close of 66.21 (December 23). 

Besides the overall Forex kitty, the country's gold reserves diminished. It reduced by $303.7 million to $17.24 billion. 

The gold reserves had remained stagnant at $17.54 billion, since it's plunge by $1.14 billion during the week ended December 4, as international prices crashed to a new six-year low.

Furthermore, the special drawing rights (SDRs) were lower by $10 million at $4 billion. 

Similarly, the country's reserve position with the International Monetary Fund (IMF) slipped. It inched-down by $3.3 million to $1.29 billion.