India's foreign exchange reserves plunged by $2.40 billion to $285.85 billion for the week ended June 1, apparently due to the central bank selling dollars to defend the rupee, Reserve Bank of India data showed on Friday.

This is the fifth weekly drop in the forex reserves kitty. The reserves had declined by $1.74 billion and $1.80 billion, respectively, in the previous two weeks.

The RBI is believed to have sold dollars during these weeks to curb the slide in the rupee's value.

The partially convertible rupee slumped to a record low of 56.52 against the dollar on May 31. It has weakened sharply in the last two months due to increased demands from oil importers and outflow of money by foreign institutional investors as poor GDP growth data dampened sentiments in the domestic markets.

Foreign currency assets, the biggest component of the forex reserves kitty, dropped by $1.31 billion to $253.09 billion during the week ended June 1, according to the RBI's weekly statistical supplement.

The RBI did not provide any reasons for the change in foreign currency assets.

It said the assets expressed in U.S. dollar terms included the effect of appreciation or depreciation of non-U.S., currencies such as the pound sterling, the euro and the yen held in reserves.

However, market experts said the RBI had sold dollars from the reserves to curb the slide in the value of the rupee.

Keywords: Forex reserves

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