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India's forex reserves fall on US rate hike fear |
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KOLKATA: India's foreign exchange reserves dipped by a tad over $2 billion in the week ending March 13 after Reserve Bank of India intervened to sell the US greenback during the week to prevent a sharp depreciation of the rupee amid concerns over the rate hike stance by the Federal Reserve.
The reserves stood at $335.730 billion at the end of the week. This is the second consecutive weekly fall in reserves, after the central bank amassed $16 billion in a five week period between January 24 and February 27.
Governor Raghuram Rajan said that RBI is fully prepared to deal with any volatility in Indian markets, due to US Federal Reserve's policy action on interest rates.
On Wednesday, the Federal Reserve said that it would adopt a cautious approach in raising interest rates in the near term. The immediate effect of this stance was that the dollar lost steam after a solid rally over the past few weeks, while the US bond yields eased.
The rupee closed at 62.41 a dollar Friday.
Edelweiss Global Wealth Management's head Anshu Kapoor said that India would continue to receive strong dollar inflows as the country's economic fundamentals are strong and the government is sending positive signals to the investors.
In the week under review, foreign currency assets dipped $1.975 billion to $310.347 billion. Foreign currency assets constitutes a bulk of the reserves and reflects the change in the value in reserves held in other global currencies including euro, pound or yen due to exchange rate movements.
Source : economictimes.indiatimes.com
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