The Hindu Business Line : Forex reserves fall by $310 m

THE country's forex reserves shrunk for the second week in a row, due to a fall in foreign currency assets. However, the amount by which the reserves declined was lesser than in the previous week.

According to Reserve Bank of India's Weekly Statistical Supplement, total reserves fell by $310 million to $142.308 billion in the week ended November 11.

In the earlier week, forex reserves had declined by $1.156 billion to $142.618 billion. In these two weeks, forex reserves have fallen by a cumulative $1.466 billion.

Foreign currency assets, which accounted for a major part of the decline, fell by $297 million to touch $136.123 billion. Foreign currency assets expressed in US dollar terms include the effect of appreciation or depreciation of non-US currencies, such as euro, Sterling and yen.

According to Mr Ajay Mahajan, Group President, Yes Bank, the decline in forex reserves can be attributed to a 2-3 per cent drop in the value of non-dollar currencies.

"For the last three weeks or so the euro has fallen sharply and the yen has also weakened against the dollar. This is probably the only reason for the fall in forex reserves, as there have been no large FII outflows in November," he said.

As per figures from SEBI, the foreign institutional investor inflow into the equity market for the week under consideration was $252.3 million.

In the week under review, the euro moved from $1.1818 to $1.1697.

Gold and SDRs were unchanged at $4.864 billion and $4 million respectively. The country's reserve tranche position in the IMF declined by $13 million to touch $1.317 billion.

About the range of the rupee in the coming week, Mr Mahajan said it could trade between 45.60-45.90, given a reasonably stable stock market, as the FII inflows are likely to match the outflows.

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