Forex reserves dip $153 mn on dollar sale

[ankitgokani]

MUMBAI: Foreign exchange reserves dipped $153 million during the week ended September 26 as RBI sold dollars to meet demand from importers.


According to the latest figures released by RBI in its weekly statistical supplement (WSS), total foreign exchange reserves, including gold and SDR dipped $153 million during the week ended September 26 to touch $292 billion.

The reserves dipped largely because foreign currency assets, predominantly comprising dollars; euro; pound and yen, among others, fell during the week by $159 million. The level of gold and SDR — the currency with the IMF — in reserves remained unchanged during the week. While reserves with IMF rose $9 million during the week.

At current levels, foreign exchange reserves have dipped by almost $18 billion since end March. This also impacted cash conditions in the domestic market. Whenever the central bank sells dollars, there is a reserves dip. But at the same times, it sucks out rupee funds for infusing dollar funds into the system.

RBI has also adopted a tight monetary policy stance and has hiked the reserve requirements (CRR) for banks — the portion of deposits that banks need to mandatorily park with the central bank. Also, the government has not been spending its revenue and parked its unspent revenue with the central bank.

In the process, it ends up blocking rupee funds in the system. As of end September 26, surplus funds parked with the central bank amounted to Rs 20,548 crore, down Rs 7,653 crore over the previous week’s levels. With more advance tax proceeds flowing into the government kitty, the government surplus with RBI could be even higher this week.

In the other developments reported in WSS, the central government has refrained from resorting to ways and means advances (WMA) — a temporary overdraft to meet its revenue mismatches — for yet another week. The states, however, borrowed Rs 7 crore during the week.

Source:Forex reserves dip $153 mn on dollar sale- Forex-Markets-The Economic Times