The Hindu Business Line : Forex reserves fall $423 m

The reserves stood at $141.475 billion for the week ended May 6, against $141.898 billion in the earlier week. The decline for this week is lower than the previous week's fall of $648 million.

Foreign currency assets moved down $366 million to touch $135.584 billion for the week under review. Foreign currency assets expressed in dollar terms include the effect of appreciation/depreciation of non-US currencies such as the euro, the sterling and the yen.

Gold reserves fell $57 million to touch $4.443 billion. During the week ended May 6, the precious metal had moved down $6 per ounce to $425 on the London Metal Exchange.

SDRs remain unchanged at $5 million. The country's reserve tranche position in the IMF also remained unchanged at $1.443 billion. FII net inflows were moderate at $45.1 million for the week.

The treasury head at a private bank said this particular week saw the dollar strengthening against other foreign currencies. "PSU banks stayed away from the market and did not sell dollars. This caused the rupee to depreciate," he said.

The euro hit a low of $1.2855 on May 2 and closed the week on May 6 at $1.2935. The dip in the forex reserves was caused by a revaluation in the central bank's currency basket.

Dealers said there was little chance that the rupee would appreciate as reports quoting the Chinese Central bank Governor said yuan revaluation might not happen next week. Following these reports, the rupee and other Asian currencies weakened.

FII inflows into the country have also been declining. The month-end demand for dollars may also cause the rupee to depreciate. The only positive factor for the rupee is oil price, which has remained under $50 per barrel.

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