Dollar Sales Dent Forex Assets $298 Million

The value of gold reserves fell $24 million to $2,924 million. The total change in foreign exchange reserves was of $322 million to $ 35,874 million.

While a part of the change in foreign currency reserves could be due to revaluation effects due to movements of various international currencies against each other over the week, analysts say that a large part of the fall in assets is likely to be due to dollar sales by the central bank. The rupee has been weak against the dollar over the past few weeks and the RBI has been selling dollars in an effort to prop up the currency.

 

Aggregate deposits in the banking system saw a year-on-year growth of 15.2 per cent for the fortnight ending July 28 this year. This is compared to a year-on-year growth of 15.6 per cent for the fortnight prior to that. Total deposits stood at Rs 8,53,893 crore compared to Rs 8,50,459 crore the previous fortnight. Demand deposits stood at Rs 1,23,837 crore, while time deposits stood at Rs 7,30,056 crore.

The year-on-year growth in investments remained the same at 17.6 per cent compared to 17.7 per cent the fortnight before. Bank credit grew 23 per cent compared to 22.8 per cent earlier, while at the same time last year it grew at 15 per cent while investments grew 18.2 per cent.

The large jump in growth rates of bank credit this year compared to last year is possible evidence of higher demand from corporates for credit, say analysts. However with deposit growth slightly slower than last year ( it was 18.6 per cent at the same time last year), and with the interest rate signals shown by the central bank, interest rates could rise.

However, with monetisation of government borrowing much higher than it was last year, the injection of liquidity into the system through this route, were it to continue, could keep interest rates low atleast to some extent.

Reserve money showed a growth of 4.7 per cent in year-on-year terms for the week ending August 4 compared to 5.1 per cent for the week before.