Forex reserves down by US 200 million

MUMBAI, JUNE 26: India's foreign currency reserves have fallen by 200 million to 30,429 million during the week ended June 18. This i...

MUMBAI, JUNE 26: India8217;s foreign currency reserves have fallen by 200 million to 30,429 million during the week ended June 18. This is the first time in the last several months that the forex reserves have dipped to such an extent due to the Kargil fall-out on the rupee8217;s position against the dollar.

The country8217;s total foreign exchange forex reserves stood at 33,289 million, down by 200 million, while there was no change in gold assets and special drawing rights SDRs, according to the Reserve Bank of India8217;s RBI weekly statistical supplement released here today.

The central bank has been selling dollars to arrest the fall of the rupee against the dollar in the last a few weeks. The Indo-Pak conflict in the Kargil region of Kashmir had created nervousness among corporates who are now rushing for dollars. Simultaneously, foreign portfolio investment in stock markets also came down. Forex dealers estimate that the RBI might have sold 400 million in the last one week following sustainedpressure on the rupee. The RBI intervened heavily on June 16 8212; after the rupee touched the 10-month low of 43.34 8212; and pumped in around 200 million. As a result, the rupee recovered by nearly 19 paise.

RBI governor Bimal Jalan on Friday said that the central bank had bought as much as 2.5 billion during the last three months and sold dollars to the State Bank of India SBI 8220;in order to meet some extra demand8221; in the last one month. Jalan said that financial markets were functioning normally and overall conditions were satisfactory 8220;except for some temporary hiccups8221; and a close watch was being maintained in view of the developments in Kargil. 8220;The RBI will continue to monitor the position, and as in the past, take appropriate measures when necessary,8221; he said, adding that the RBI was keeping a close watch as there 8220;is obviously some uncertainty in the market.8221;