| Date: |
09-01-2016 |
| Subject: |
Forex reserves fall $1.68 billion to $350.3 billion |
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KOLKATA: India's foreign exchange reserves fell $1.68 billion in the week ended January 1, suggesting that the Reserve Bank of India may have intervened in the market to soften the fall of the local currency, facing withdrawal of foreign investment.
The reserves, which act as a cushion against dollar outflows and provide critical import cover, stood at $350.369 billion at the end of the reporting week, the RBI said.
The dollar reserves can be used to support the rupee and prevent it from depreciating sharply. The rupee closed at 66.69 to the dollar on Friday, 24 paise higher than Thursday's close of 66.93 per dollar. Pressure on reserves is likely to intensify in the weeks ahead as global investors may withdraw their investments from emerging economies and seek refuge in safer destinations, especially after the uncertainty led by China's decision to devalue the yuan.
The People's Bank of China surprised the markets again on Wednesday by setting the official midpoint rate on the yuan at 6.5646 per dollar, the lowest since March 2011.
A few weeks earlier, the People's Bank of China had extended yuan trading hours to 11.30 pm local time, a move aimed at attracting more market participants, leading to speculative bets. India's foreign currency assets, which account for 90% of the reserves, fell $1.6 billion to $327.828 billion. Gold reserves, in dollar terms, fell $304 million to $17.240 billion, RBI data showed.
Source : economictimes.indiatimes.com
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