Forex reserves record biggest fall since Nov 2008

Breaking a nine-week streak of net accretion, India’s foreign exchange reserves fell $ 4.57 billion in the week ended August 13 due to changes in values of international currencies and import payments. This was the biggest fall in almost 21 months.

The reserves had fallen $5.02 billion in the week ended November 14, 2008, when overseas investors exited India after the global financial crisis intensified. Foreign currency reserves, including currency reserves, gold, special drawing rights (SDRs) and reserves with IMF, fell to $282.79 billion as on August 13. Foreign currency assets were down $4.48 billion to $256.59 billion, according to the Reserve Bank of India.

DK Joshi, chief economist with rating agency CRISIL, said the decline reflected the change in the value of global currencies and mounting current account pressures.

The trade deficit, the difference between exports and imports, inched towards $ 13 billion in July, the highest in the last 22 months, according to the government of India. The government will officially announce the trade data on September 1.

Foreign institutional investors in stock and debt made net purchases of $462.45 million, according to the Securities and Exchange Board of India.

The flow of funds from overseas investors remained positive, the head of treasury with a large public sector bank said.

The value of gold reserves remained constant at $19.27 billion. SDRs, an international reserve asset, dipped $56 million to $4.98 billion. The reserve position with the International Monetary Fund declined $21 million to $1.93 billion.