The Hindu Business Line : Forex reserves down $370 m on dollar selling

"The RBI was selling dollars at various levels to support the rupee. This dollar outflow is reflected in the decrease in foreign currency reserves."

Mumbai , June 2

For the second week in a row forex reserves fell as the Reserve Bank of India sold dollars to support the declining rupee, said dealers.

According to statistics from the RBI, the foreign currency reserves declined by $370 million to touch $162.592 billion for the week ended May 26.

In the previous week it had fallen by $793 million to touch $162.962 billion.

Foreign currency assets for the week under consideration declined by $370 million to touch $155.509 billion.

Foreign currency assets, expressed in dollar terms, include the effect of appreciation or depreciation of currencies as euro, sterling and yen.

The FII outflow from the domestic equity market for the week was Rs 1,333.4 crore according to figures from SEBI.

The euro moved in the range of $1.2766 to $1.2867 in the week under consideration.

"The RBI was selling dollars at various levels to support the rupee. This dollar outflow is reflected in the decrease in the foreign currency reserves," said the head of treasury at a private bank.

Gold was unchanged at $6.301 billion and the country's reserve position in the IMF was also same as in the previous week at $782 million for the week under review.

Outlook

The rupee is likely to trade between 45.75 in the lower end and 46.25-46.50 at the upper end for the short-term.

"I don't see FII money coming in because all are waiting for dips in the stock market rather than coming in now. Given that scenario the rupee would be under pressure in the short-term," the bank official said.