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Economic Survey Doubt Chapter 4 (REER)

Context: Chapter 4 of economic survey, page number 100, section B titled "Likelihood of capital losses"

Issue: It says, "the appreciation of the rupee required to result in a valuation loss of Rs. 4 lakh crore that would in turn wipe out the remaining capital of the RBI (assuming that Rs 4 lakh crore is redeployed) is calculated."

What does it mean? When Rupee will appreciate, forex reserve will lose value. But what does "that would in turn wipe out the remaining capital of the RBI" mean?
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