The Hindu Business Line : Forex reserves dip by over $1.25 b

Reserves declined by $1.256 billion for the week ended July 30, to touch $118.319 billion against $119.575 billion the previous week when it dipped by $1.531 billion, as per the latest RBI statistics.

Analysts ascribe heavy infusion of dollars by the central bank during the week ended July 30 as the primary reason for the massive dip in reserves. During this period, the rupee weakened substantially to touch a 13-month low of 46.48 against the dollar, and even touched an intra-day low of 46.52 levels.

A weakening of major currencies like euro, pound sterling and yen also led to a decline in the foreign currency asset position, which include the effect of appreciation or depreciation of non-US currencies in reserves, expressed in dollar terms. This too impacted the reserves position, dealers said.

Foreign currency assets, declined by $1.248 to touch $112.967 billion against $114.215 billion the preceding week.

The reserve position in the IMF dipped by $8 million to touch $1.293 billion, according to RBI's Weekly Statistical Supplement.

The forex reserves falling massively in two successive weeks does not necessarily indicate a trend.

There may not be a possibility of a sustained drop in reserves as large foreign inflows are expected by way of the TCS IPO, said a banker with a public sector bank.

The US currency is expected to decline on weaker than expected non-farm payroll and job data, which might lead to appreciation in the rupee, he said.

The funds parked by the banks in repos with the central bank as on July 30 were about Rs 53,000 crore.

The amount has marginally declined from the previous week when it was around Rs 58,000 crore.