The Hindu Business Line : Forex down $5 b in April-September on valuation loss

VALUATION loss resulting in depreciation of major currencies against the dollar resulted in a decline of $5 billion in the country's forex reserves for April-September 2005. The valuation loss was only $0.3 billion during the same period last year.

Foreign investment is the largest component in the country's foreign exchange reserves which increased by $1.5 billion in April-September 2005 as against $6.6 billion in the corresponding quarter last year. Foreign investment was to the tune of $7.4 billion ($2.5 billion).

According to the Reserve Bank of India, other major sources of accretion to the country's foreign exchange reserves for the second quarter of 2005-06 have been banking capital and external commercial borrowings. Banking capital was $3 billion ($0.6 billion) and external commercial borrowings were $2.7 billion ($1.5 billion).

According to the RBI, the total accretion to the foreign exchange reserves during the period was $6.5 billion on a Balance of Payment basis (excluding valuation effects).