The Hindu Business Line : Forex reserves dip $1.02 b

LED by a revaluation in the central bank's basket of currencies, the country's forex kitty dipped by $1.020 billion in a single week, after an accretion of over $3 billion in the previous week. A similar fall in forex reserves (by $1.370 billion) was witnessed last in the week ended August 27.

Total reserves were lower at $129.697 billion, for the week ended December 10, as per the latest RBI statistics. Reserves were at $130.717 billion in the previous week.

Banking analysts ascribed the erosion in reserves to a revaluation in RBI's currencies basket in addition to some outflows due to repatriation by foreign currency funds.

"The euro had weakened against the dollar during the week," said a treasury head of a leading state-owned bank.

"Demand for dollars by forex market participants and profit booking by foreign investors could also be a reason for the southward movement in reserves," he added.

Foreign currency assets sharply depreciated by $1.010 billion to $123.751 billion. Foreign currency assets expressed in dollar terms include the effect of appreciation and depreciation of non-US currencies, such as euro, sterling and yen, as per the WSS (weekly statistical supplement).

The reserve tranche position in the International Monetary Fund fell by $10 million to $1.401 billion for the week ended December 10, while the gold and special drawing rights position remained unchanged at $4.540 billion and $5 million respectively.

During the week, outstanding amount in repos or reverse repo auctions under the Liquidity Adjustment Facility of the RBI was in the range of Rs 15,820 crore and Rs 23,555 crore. According to the WSS, this outstanding amount depicts absorption of liquidity by the RBI through reverse repo auctions.

In the past week, the domestic currency made handsome gains against the dollar as it appreciated to 43.91/92 against the greenback on Thursday. On Friday, the rupee shed some gains to end lower at 43.96/97 per dollar. Liquidity conditions were tight as call rates climbed as high as 6.00 per cent towards close of the week.