The Hindu Business Line : Forex reserves register $ 698 m decline

FOR the first time in around 14 weeks, the country's foreign exchange reserves have registered a decline of $ 698 million, after accelerating by over one and a half billion dollars every week since the beginning of this calendar year.

Total reserves now stand at $ 103.126 billion, as on the week-ended January 16, as compared to $103.824 billion in the previous week, according to the weekly statistical supplement of the RBI.

Forex analysts ascribe the dip in reserves largely to a revaluation in the RBI's basket of currencies. This point is also reflected in the decline of foreign currency assets with the RBI during that week.

As on January 16, foreign currency assets also declined by $ 698 million to touch $ 98.908 billion. This is mainly because of the depreciation of the euro against the US dollar during the week, said a forex dealer.

"Foreign currency assets expressed in dollar terms include the effect of appreciation and depreciation of non-US currencies, such as euro, sterling, yen , held in the reserves," said the supplement.

The euro settled stronger at $ 1.2757 on Friday, when the Pound too, gave the dollar a drubbing by ascending to $ 1.8490.

In fact, the domestic currency too ended this week on a high note, closing at 45.3525/3575 on Friday, January 23, after trading in a narrow five paise band all through the week. Dealers said, while the dollar inflows continued to be steady, it is the lack of corporate demand for the greenback that allowed the rupee to gain strength. State-run banks were seen mopping up excess dollar liquidity at RBI's behest, but it was not enough to hold the rupee.

Analysts contend, that as long as the FII investments continue to pour into Indian equities markets, the dollars will flow in and the rupee will maintain its appreciation mode.

The week also ended on an optimistic note, with the ratings upgrade by the international credit rating agency, Moody's, capturing the interest of domestic financial markets. It is expected that Moody's upgrade of India's rating along with the government's foreign currency issuer rating to Baa3 from Baa1 earlier, will attract further investment interest in the country, from external investors.

Meanwhile, according to the W.S.S., gold reserves of the country stood at Rs 4.215 billion, while special drawing rights grew by $ 3 million to touch $ 13 million.