The Hindu Business Line : Forex reserves slump by $4.9 b

Mumbai, June 20 The country’s foreign exchange reserves plummeted by $4.973 billion to $310.687 billion for the week-ended June 13. According to agency reports, this is the biggest fall in reserves in a single week in the last two and half years.

In the previous week, the reserves rose by $1.046 billion to $315.7 billion.

According to the RBI’s Weekly Statistical Supplement, foreign currency assets dropped by $4.965 billion to $300.95 billion.

Treasury officials attributed the sharp drop to the special market operations conducted by the RBI for meeting the dollar-requirements of public sector oil companies.

“Oil companies have been selling oil bonds to the RBI. In fact, last week the RBI also raised the overall ceiling limit for the special market operations to Rs 1,500 crore on any single day,” said the treasury head at a public sector bank.

Foreign currency assets expressed in dollar terms include the effect of appreciation or depreciation of non-US currencies (such as euro, sterling, yen) held in reserves.

Revaluation effect

Hence, the drop in reserves could have partially been due to a revaluation effect, said another senior treasury official at a private bank. The euro fell from $1.56 to $1.53 against the dollar during the week under consideration.

“The RBI may have also sold some dollars last week to prevent the rupee from depreciating beyond 43,” said the official.

Gold and SDRs remained unchanged at $9.2 billion and $11 million, respectively. The reserve position in the IMF fell by $8 million to $519 million.