In the previous reporting week, the reserves had declined by USD 1.13 billion to USD 420.591 billion.
The reserves had touched a life-time high of USD 421.914 billion on February 9, FY18. It had crossed the USD 400-billion mark for the first time in the week to September 8 but has since been fluctuating.
This is its biggest fall since February 1, when it had lost 44 paise.
The pound sterling also finished lower at Rs 88.76/78 per pound
The total reserves had risen by USD 3 billion to USD 417.89 billion in the previous reporting week.
The rupee had depreciated by a staggering 70 paise in a five-day losing run, giving back all its 2018 gains.
Intraday, the home currency touched a high and low of 63.44 and 63.77, respectively. The level at which it ended was last seen on July 17, 2015.
The reserves had crossed the USD 400-billion mark for the first time in the first week of September this year but have been fluctuating since then.
The pound sterling also finished lower at Rs 85.70/72 at the close of the Interbank Foreign Exchange.
The gold reserves remained unchanged at USD 20.703 billion, unlike in the last reporting week when it had risen by a tad.
The pound sterling also finished higher at Rs 86.10/12 at the close of the Interbank Foreign Exchange (forex) market on Wednesday.
The rupee opened higher by 4 paise at 64.98 per dollar as against yesterday's closing level of 65.02 per dollar at the Interbank Forex Market (FOREX).
The rupee resumed higher by 18 paise at 64.75 per dollar as against last Friday's closing level of 64.93 at the Interbank Forex Market (Forex) market.
As per the discussion paper floated in this regard, the retail market will have the same market hours as the interbank market (09:00 to 17:00 hrs).
The home currency has now appreciated by 24 paise in the recent leg of rally despite heavy capital outflows.
Forex market sentiment worldwide wobbled under renewed geopolitical risks amid concerns that North Korea may be preparing another missile test.
According to the global financial services major, forex reserves could be used for funding growth-critical public infrastructure projects and the macro backdrop is also suitable for this.
The US dollar ended higher against the rupee at 63.93/94 per dollar and the pound sterling also turned higher at Rs 84.48/50 at the close.
In the previous week, the reserves had increased by USD 1.148 billion to USD 394.55 billion.
The report said the rupee is expected to reach Rs 66.75/USD level by December. According to BofAML, the RBI has bought about USD 16 billion in the spot market since April.
The Reserve Bank of India fixed the reference rate of the rupee at 64.0154 against the US dollar and 76.0439 for the euro.
A rally in local equities supported the rupee sentiment, a dealer said. The rupee resumed higher at 63.93 per dollar at the interbank foreign exchange (Forex) against last closing level of Rs 64.04 per dollar. The domestic unit hovered between 63.93 and 63.87 during morning deals. It was quoted at 63.90 at 1030 hrs.
According to Morgan Stanley's report, Indian forex reserves are at an all-time high and have risen at the fastest pace since 2015.
China's foreign exchange reserves rose twice as much as expected in July to a nine-month high as tighter regulations and a weaker dollar keep capital outflows in check.
Crude oil prices steadied- after hitting ten-month lows in the middle of this week.