India’s foreign exchange reserves are lower by about $100 bn from a year ago. The rupee has also depreciated; it has seen a decline of more than 7% since the start of the financial year in April. Though the Reserve Bank has dipped into the reserves to help stem volatility in the rupee, that is not the only reason that the observed value of reserves has declined. Changes in valuation, given the dollar strengthening brutally against other currencies too have also contributed. How does this work? And what implications do all these changes have for the Reserve Bank’s action path going forward?