MUMBAI: Foreign exchange reserves have dipped sharply by $2 billion to $283.643 billion as on December 18, from $285.742 billion a week
The latest figures released by RBI on Friday indicate that the total foreign exchange reserves, including gold and special drawing rights (SDR — reserves currency with IMF) dipped $2.1 billion to touch $283.6 billion during the week ended December 18. The dip was largely on account of a fall in foreign currency assets, which declined $2 billion. The value of SDR and the reserve capital with IMF dipped $66 million and $18 million, respectively, during the week.
“The dollar continued to gain against major global currencies during the week after the US Federal Reserves Board. This could have resulted in a revaluation of non-dollar assets in reserves,” said a treasury official with a public sector bank, on condition of anonymity. Almost 40% of the reserves is believed to be comprised in non-dollar assets, including the sterling pound, yen, euro and the yuan, though no central bank makes their currency composition of reserves public. The central bank’s data indicates that it has not been buying much dollars, as it would mean adding more rupee funds into the system, which in turn would add to inflationary pressures. The central bank is anyway grappling with high food inflation, which could spillover into wider inflationary pressures.
In other developments, the central government has kept its ways and means advances (WMA) account with RBI vacant during the week ended December 18. WMA is a facility, under which the government (state as well as the Centre) can borrow from the central bank to meets its daily revenue mismatches. While borrowings within the limit is at the prevailing repo rate, borrowings above the agreed limit (between the government and RBI) is at 2% higher than the repo rate. State governments on the other hand have hiked their outstanding WMA to Rs 58 crore as on December 18, after keeping it vacant in the previous week.
Source : The Economic Times