Fii Outflows Pare Forex Hoard By $77 Million

Foreign exchange reserves of the country have fallen by $77 million in the week ended September 14, 2001, over the previous week.

The reserves as on September 14 stood at $45.288 billion compared with $45.365 billion in the previous week.

The kitty has dipped after logging continuous net accruals over the past couple of months. Analysts attribute the decline in the forex reserves to repatriations by foreign institutional investors who have been dumping stocks and pulling out of the Indian markets in the wake of the terror attacks on the US.

Additionally, the Reserve Bank of India's (RBI) intervention to a limited extent in the currency market to stem the slide of the rupee vis-a-vis the dollar also pared the forex kitty.

 

The reduction under the forex reserves head has been contributed solely by foreign currency assets, which came down by $77 million to $42.467 billion in the reporting week over the previous week.

Gold reserves and special drawing rights stand unchanged at $ 2.817 billion and 4 million, respectively.

That slackness has set in the economy is underscored by the fact that the non-food credit offtake from scheduled commercial banks has declined by Rs 920 crore in the week ended September 7, 2001, and stands at Rs 4,77,565 crore, compared with Rs 4,78,485 crore as on August 31, 2001.

Food credit offtake during this period has come down by Rs 269 crore to Rs 50,069 crore (Rs 50,338 crore as on August 31).

Non-food credit offtake in the financial year so far has been only Rs 6,122 crore (Rs 20,746 crore in the corresponding period in 2000-01), while food credit offtake has been Rs 10,078 crore (Rs 6,759 crore).

Overall, credit extended by scheduled commercial banks has come down by Rs 1,189 crore in the week ended September 7 to Rs 5,27,634 crore (Rs 5,28,823 crore in the previous week).

In fiscal 2001-02 so far, the bank credit has grown at a slower pace of 3.4 per cent (Rs 17,389 crore) compared with a 6 per cent growth (Rs 26,307 crore) in the corresponding of 2000-01. Though banks are striving to mobilise more demand deposits, which are a cheap source of funds compared with time deposits, RBI figures reveal a totally different picture.

Demand deposits have in fact declined by Rs 1,384 crore to Rs 1,40,326 crore, while time deposits have increased by Rs 705 crore to Rs 8,94,817 crore in the week ended September 7 over the previous week.

Aggregate deposits of scheduled commercial banks have come down by Rs 679 crore to Rs 10,35,143 crore in the reporting week over the previous week.

In the current financial year, aggregate deposits have grown at a faster clip of 7.5 per cent (Rs 72,526 crore) as against 6.5 per cent (Rs 52,714 crore) in the corresponding period of fiscal 2000-01.

Investments by commercial banks, predominantly in government securities, have fallen by Rs 8,528 crore to Rs 4,09,367 crore in the week ended September 7 over the preceding week.

Borrowings by these banks from RBI has risen by Rs 4,534 crore to Rs 5,282 crore as on September 7 over the previous week.

Reserve money in the economy has increased by 0.5 per cent (Rs 6,347 crore) in the fortnight ended September 7 compared with a rise of 0.2 per cent (Rs 2,800 crore) in the previous fortnight ended August 24.