Forex reserves down $1.4 bn to $351 bn

The rupee saw volatility in the week ended Dec 18. The currency had dropped to about 67 to a dollar

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The Reserve Bank of India (RBI) sold $1.4 billion in the secondary market in the week when the US Federal Reserve raised its policy rate by 25 basis points, data showed.

India's total reserves, as on December 18, stood at about $351.1 billion, down from $352.5 billion a week before that, data showed.

The rupee saw volatility in the week ended December 18. The currency had dropped to about 67 to a dollar in the week, prompting RBI to intervene. However, the rupee gained about 0.5 per cent to 66.42 to a dollar on December 17, the highest in Asia in a trading day after the Fed rate increase. The rupee had started gaining from the very start of the week, even before the Fed's decision on rate increase.

A drop in $1.4 billion is not unique. In some months, reserves have fallen $2 billion but the central bank recovered the amount through purchase of dollars in the following week.

Data released on Friday also showed scheduled commercial banks' credit grew 11 per cent in the week ended December 11, from 10.8 per cent a fortnight earlier.

According to analysts, the increase is led by retail loans and because of the base effect, as last year's December quarter saw tepid growth in credit, owing to a high interest rate. RBI started cutting rates from January 15 this year.

Deposits grew 11.5 per cent year-on-year in the week ended December 11, and investments grew 12.3 per cent.