The Hindu Business Line : Forex reserves fall by $1 b

THE country's foreign exchange reserves have fallen by about $1 billion for the week ended August 19 on account of a drop in foreign currency assets as well as currency revaluation. This is a reversal of the trend in which the reserves had surged by more than $6 billion for the previous three consecutive weeks.

As per the RBI's Weekly Statistical Supplement, the country's foreign exchange reserves fell by $1.157 billion to touch $143.218 billion, down from $144.375 billion the previous week.

For the week ended July 29, August 2 and August 12, forex reserves had consistently gained by $1.7 billion, $2.037 billion and $3.062 billion respectively.

Foreign currency assets for the week ended August 19 decreased by $1.141 billion to touch $137.383 billion during the week under consideration. 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 remained unchanged at $4.395 billion and $4 million respectively The country's reserve tranche position in the IMF, however, dropped by $16 million to touch $1.436 billion.

According to the treasury head of a private bank, during the week under consideration, the central bank could have been selling dollars through state-run banks, to prevent the rupee from depreciating. The FII inflow into the equity market during the week was just $33 million, according to the Securities and Exchange Board of India Web site.

In the coming week, dealers said the rupee could appreciate on market talks of a second round of Chinese yuan revaluation. On the downside, even if the price of global crude rises, the central bank might step in to prevent the rupee from depreciating beyond the 43.80 level, they said.

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