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Our Bureau

Mumbai, Aug. 24

The country’s forex reserves fell by $2.551 billion to $226.445 billion for the seven days ended August 17, dipping for the second consecutive week.

This was due both to FII outflows resulting from the US sub-prime loan crisis, as well as the Reserve Bank of India’s recent curbs on external commercial borrowings.

Market participants also attribute the fall in reserves to the revaluation of other currency assets.

The total FII outflow for the week under consideration was Rs 3,905.70 crore. Dealers however, felt the outflows would only be a short term phenomenon and would not have any long-term impact on the market.

The reserves had fallen by $346 million for the week ended August 10 to touch $228.996 billion, according to the RBI’s Weekly Statistical Supplement.

Total foreign currency assets decreased by $2.550 billion to $219.103 billion. Foreign currency assets, as expressed in dollars, include the effect of appreciation or depreciation in non-US currencies (euro, sterling and yen) held in reserves.

The reserves in SDRs increased by $1 million to $2 million while the country’s reserve position in IMF fell by $2 million to $453 million. The gold reserves remained unchanged at $6.887 billion.

The home currency also fell to a low of 41.71 during the week under consideration. Dealers said this was in reaction to the US subprime crisis and the crash in the domestic equity market that led to huge dollar selling.

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