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| Gold pushes up India's forex reserves | |
| BS Reporter / Mumbai January 11, 2009, 0:12 IST | |
India’s foreign exchange reserves rose by $627 million to touch $255.24 billion in a week ended January 02, 2008, predominantly due to increase in value of gold assets held by the Reserve Bank of India.
They (reserves) rose by Rs 26,626 crore, in rupee terms, to reach a level of Rs 12,47,495 crore, according to RBI weekly statistical data.
The foreign currency assets rose by just $ five million to $ 245.87 billion. The gold reserve moved up by $ 624 million to $ 8.48 billion. The reserve position with International Monetary Fund saw a decline of $ two million to USD 4.28 billion.
RBI’s reference rate for US dollar did not witness much fluctuation in the reporting week (December 29, 2008 -January 02, 2009). It moved between Rs 48.45 to Rs 48.89 to a dollar.
HIT HARD
Trend in India's foreign exchange and gold reserves in 2008 ($ billion) |
| Month-end |
Foreign
exchange
reserves |
Gold
reserves |
| January |
288.31 |
8.30 |
| February |
301.23 |
9.50 |
| March |
309.16 |
9.50 |
| April |
312.87 |
10.03 |
| May |
314.61 |
9.20 |
| June |
311.79 |
9.20 |
| July |
306.79 |
9.28 |
| August |
295.30 |
8.69 |
| September |
291.81 |
8.69 |
| October |
252.88 |
8.38 |
| November |
247.68 |
7.86 |
| December |
254.61 |
7.86 |
According to RBI data, country’s foreign exchange reserves have shown a declining trend in the second half of the 2008. Apart from current account deficit, outflows under foreign institutional investors (FIIs) were the other major sources contributing to decline in foreign exchange reserves during April-September 2008. The foreign exchange reserves have declined by an amount of $ 23.38 billion during April-September 2008 including the valuation effects as compared with an increase of $ 48.58 billion in April-September 2007.
On a Balance of payments basis BoP basis (excluding valuation effects), the decline in the foreign exchange reserves was $ 2.49 billion during April-September 2008. Valuation loss, reflecting the depreciation of major currencies against the US dollar, accounted for $ 20.88 billion in total reserves during April-September 2008 as against a valuation gain of $ 8.14 billion in the corresponding period of previous year.
The valuation loss explained 89.3 per cent of decline in reserves during April-September 2008.
Apart from current account deficits, outflows under FIIs were the other major sources contributing to decline in foreign exchange reserves during April-September 2008.
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Discussion Board
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| Arpita |
March 17 , 2009 ,13:58 IST |
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| To prevent rupee from further appreciating, RBI needs to intervene in the forex markets and buy dollars, thereby increasing the demand for dollars. Now if RBI has to buy dollars it would need to sell rupees, right? So there would be more currency (rupees) in the system. If there is more money in the system then inflation will rise. This is because inflation in crude terms occurs because of "lots of money chasing few products", thus driving the prices of products up.
Hope this helps.
Regards,
Arpita@ 4xindia.com |
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Reply |
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