Forex Reserves Down $202 Million

Though the value of gold reserves remain same at $2.92 billion, the reserves of special drawing rights have increased $4 million.

Consequently, the foreign exchange reserves was down $198 million over the week.

The change in the foreign exchange reserves is triggered by the RBI move to prop up the supply of dollars in a thin market marked by rising corporate demand. The rupee has been sharply weakening against the greenback over the last few weeks despite the central bank's efforts to tighten the short-term liquidity by continuously hiking the repo rates.

According to senior analysts, as the demand for dollar is due to the genuine import demand of corporates as well as the higher inflation rate, not because of speculative activity, the RBI measures have not been successful so far to curb the rupee's fall.

 

The year-on-year (y-o-y) growth of money supply over the week ended on July 28 was 14 per cent, lower than 18.8 per cent growth in the last year. Reserve money showed a growth of 0.3 per cent over the week ended on August 4, which was much lower than the growth of over 5 per cent in the week before.

Loans and advances to the central government have fallen Rs 4,032 crore over the week ended on August 11 to Rs 8,870 crore. The same to state governments, however, has increased by Rs 283 crore over the week to Rs 2,772 crore.

Aggregate deposits in the banking system grew 14.9 per cent on a year on year basis to Rs 8,53,893 crore for the fortnight ending on July 28, 2000. The growth was marginally lower than the growth of 15.6 per cent for the fortnight before. However, the y-o-y 14.9 per cent growth is much lower than the last year's figure of 18.6 per cent. Demand deposits stood at Rs 1,23,837 crore, Rs 1682 crore lower than the amount at the end of the last fortnight.

The y-o-y growth in investment remained steady at 17.6 per cent in comparison to 17.7 per cent in the fortnight before. The growth is, however, lower in comparison to the last year's growth of 18.2 per cent.

Bank credit grew 23 per cent y-o-y over the fortnight. This was marginally higher than the growth of 22.8 per cent in the last fortnight, but substantially higher than the last year's growth of 15.2 per cent. The higher growth of bank credit was mainly contributed by the substantial increase of non-food credit. This implies higher demand for credit from the corporate sector. However, the y-o-y growth of food credit in the current year is also much higher in comparison to the last year.