Reserve Money Up 1%, Sdr Kitty Dries Up

For the week ended December 6 1996, Reserve money increased 1 per cent over the previous week to touch Rs 1,91,102 crore. In absolute terms, this represented a jump of Rs 1,886 crore. However, on a year-to-year basis, reserve money has fallen by 1.7 per cent during the period ended December 6 1996. On the other hand, SDR's fell to zero on December 20, 1996.

One of the main reasons for the jump in the reserve money is the rise in the net RBI credit to government which was up 1 per cent to Rs 1,27,808 crore. On a year-to-year basis, the figure increased by 5.3 per cent. Another prime reason for the spurt is a 3.5-per cent rise in the RBI credit to banks and commercial sector. This amount rose by Rs 423 crore within the space of one week to touch Rs 12,418 as on December 6. However, the apex bank's credit to the commercial sector has fallen by 56.9 per cent over the same period in the previous year.

Among the other components which have contributed to the rise in reserve money is the increasing amount of currency in circulation. During the week ended December 6, currency in circulation went up by Rs 2,801 crore.

The quantum of ad hocs came down to Rs 8,615 crore for the week ended December 13, 1996. For the week ended December 6, the figure for ad hocs was Rs 8,950 crore. Reflecting the tight money market conditions, banks' holdings of