MUMBAI: The country's foreign exchange reserves dipped for the sixth straight week despite measures to boost inflows over the past two months. While a part of the dip in reserves is attributed to the Reserve Bank of India (RBI) selling dollars to rein in the value of the rupee against the dollar, there could also be an impact of revaluation of non-dollar assets in reserves.
Forex reserves dipped $1 billion during the week ended January 13. According to the latest figures released by RBI, total foreign exchange reserves are at $292.5 billion as on January 13. Foreign currency assets comprising dollars, British pounds and euro ,among others dipped $1,009 million during the week.
Special drawing rights, or SDRs, (the reserve currency with the International Monetary Fund) and the reserve capital with the IMF - dipped $4.7 million and $2.8 million, respectively.
With a few exceptions, forex reserves have been dipping for over nine weeks now. Reserves have dipped $28 billion since end-October. Analysts attribute this to a combination of factors - revaluation of non-dollar assets vis-A -vis the dollar and also dollar sales by the RBI to rein in the value of the rupee which dipped about 20% between August and end-November.
A further dip in reserves could make India's external sector more vulnerable. At present, the reserves are adequate to finance about eight-and-a-half months imports, down from about 15 months before the crisis of 2008.
Source : economictimes.indiatimes.com