The Hindu Business Line : RBI clarifies

Changes in the foreign currency assets (FCA) in rupee terms between any two dates can be attributed to (i) changes in the dollar value of the FCA on account of appreciation/ depreciation of the non-USD portfolio (such as Euro, Sterling, Yen) (ii) changes in the rupee value of the FCA on account of appreciation/depreciation of the dollar against INR; (iii) any accretion/depletion to the FCA on account of purchase/sales, as also aid receipts/payments, income/discount earned, etc.

Thus, cost of acquisition is strictly attributable only to the accretion on account of purchases during any period.

In the present article, the writer has compared the values of FCA as on June 6, 2008 with that of March 31, 2008. As on June 6, the total FCA stood at $305.92 billion (Rs 13,09,030 crore); of this $299.23 billion (Rs 11,96,023 crore) represents the base as on March 31 and $6.69 billion (Rs 1,13, 007 crore) the accretion between April 1 and June 6.

The USD/INR exchange rate was 42.78 on June 6, against 39.97 on March 31. Thus, of the change of Rs 1,13,007 crore, as much as Rs 84,383 crore is on account of the increase in the rupee value of the base figure itself.

Only the remaining Rs 28,624 crore can be attributed to the accretion of $6.69 billion between April 1 and June 6. As such, the average cost of acquisition of $6.69 billion will be Rs 42.78 per dollar and not Rs 168.92.

It may be reiterated that the accretions are not necessarily market purchases of the dollar. Hence, the cost on account of purchases itself will be even lower than Rs 42.78.

Alpana Killawala Chief General Manager Reserve Bank of India