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

THE country's foreign exchange reserves declined in excess of $1 billion on account of currency revaluation. Forex reserves have shrunk for the second week in a row.

For the week ended July 1, forex reserves fell by $1.447 billion to touch $137.443 billion, according to the Reserve Bank of India's Weekly Statistical Supplement. In the earlier week, the total reserves were at $138.890 million. In the last two weeks alone, reserves have fallen by $2.123 billion.

The decline in reserves was mainly due to the huge dip in foreign currency assets, which fell by $1.516 billion to touch $131.426. Foreign currency assets expressed in US dollar terms include the effect of appreciation/depreciation of non-US currencies (such as euro, sterling, yen) held in reserves.

This fall was partly offset by gold, which increased by $77 million to touch $4.453 billion. Special Drawing Rights were unchanged at $4 million. The country's reserve tranche position in the IMF fell by $8 million to touch $1.560 billion, the WSS said.

The week under review saw an inflow of $515 million into the country's equity market.

Currency revaluation was the only reason for the decrease in reserves, said a chief dealer with a private bank. The week in question saw a significant fall in all non-dollar currencies. According to another bank official, inflows of dollars into the country have been matching outflows. As the RBI has shifted a significant part of the reserves to euro, any change in the value of the euro would have an impact on the reserves, he said.

About the movement of the rupee in the coming week, he said the rupee was likely to trade along the levels of 43.60.

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