Dowslide begins: Forex kitty dips $698-m on euro’s woes

The Reserve Bank of India’s weekly statistical supplement released on Saturday showed that the country’s foreign exchange reserves...

The Reserve Bank of India’s weekly statistical supplement released on Saturday showed that the country’s foreign exchange reserves fell by $698 million to $103.13 billion in the week ended January 16 from $103.82 billion the previous week.

The fall is the result of the euro’s slide against the dollar. The euro fell by nearly 3.5 per cent against the dollar in the week to January 16. The foreign currency assets expressed in dollar (US) terms included the effect of appreciation and/or depreciation of other currencies held in the RBI reserves such as the euro, pound sterling and yen.

Dealers are of the view that this fall is a one-off event, and the country will continue to attract forex inflows. Reserves had increased by $30 billion in the fiscal 2002-2003 to cross the $100 billion mark for the first time by late December.

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The market is betting on the fact after Moody’s upgrade of the country’s long-term foreign currency ratings to an investment grade of ‘Baa3’ from ‘Ba1’ citing rising foreign investments and economic growth will abet more inflows.

The rupee ended the week goneby at a two-and-half-month high against the dollar at 45.35/36 after Moody’s upgrade.

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