The Hindu Business Line : Forex reserves fall $676 m

THE country's foreign exchange reserves fell $676 million to touch $138.890 billion, for the week ended June 24, according to the Reserve Bank of India's Weekly Statistical Supplement.

In the previous week, forex reserves had risen by over $1 billion to touch $139.566 billion.

The decline is mainly due to currency revaluation as Foreign Currency Assets fell by $671 million to touch $132.942 billion.

Foreign currency assets expressed in dollar terms include the effect of appreciation/depreciation of non-US currencies (such as euro, sterling, yen) held in reserves. Gold and Special Drawing Rights were unchanged at $4.376 billion and $4 million respectively.

The country's reserve tranche position in the IMF fell $5 million to touch $1.568 billion.

For the week under review, the inflow into the equity market for the week was at $706.4 million, according to the Securities and Exchange Board of India.

The euro also fell from $1.22 on Monday to $1.20 on Friday during this week.

According to a senior bank official, the decline could be due to a payout from the forex reserves. The RBI may have used interest payments or external borrowings.

As the RBI was not seen selling dollars, the decline may not be for providing support to the dollar. Therefore, currency revaluation is another reason for the decrease, the official said.

In the coming week, the rupee is likely to remain in the range of 43.40-43.60.

A dealer with a private bank said, "If the dollar reverses globally and if euro makes a comeback of about 200-300 points, the rupee will also benefit.

Even if dollar gains, the impact on the rupee would be muted. So, it seems like a win-win situation for the rupee."

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