Mumbai, Aug 29 (IANS) An appreciation in non-dollar currencies propelled India’s foreign exchange (Forex) reserves to gain $920.6 million in the week ended August 21.
The reserves for the week under review stood at $355.35 billion from the previous week’s (August 14) $354.43 billion.
For the previous week ended August 14, the reserves had gained by $1.08 billion to $354.43 billion.
“The appreciation of non-dollar currencies buoyed the Indian reserves. The appreciation of Euro by 2.7 percent against the dollar made a lot of difference,” Anindya Banerjee, associate vice president for currency derivatives with Kotak Securities told IANS.
“The dollar weakened against most major currencies in that week,” he said.
The data furnished by the Reserve Bank of India (RBI), in its weekly statistical supplement showed that the foreign currency assets (FCAs) rose by $894.3 million to $331.73 billion.
The FCA which constitutes the largest component of Forex reserves includes nearly 20-25 percent of non-dollar currencies, securities and bonds bought abroad.
During the week under review, the country’s gold reserves were stagnant at $18.25 billion. The reserves had plunged by $824.2 million in the week ended July 31.
The plunge in bullion reserve value that time came after the international prices steadily declined as a result of the dollar gaining strength.
The trend was soon reversed and the bullion value increased with the rise in gold prices from the sub-$1,080 an ounce (August 6) to the current $1,165 level.
The special drawing rights (SDRs) in the period under review were higher by $19.9 million at $4.07 billion.
The country’s reserve position with the International Monetary Fund (IMF) was up by $6.4 million to $1.29 billion.
Banerjee added that the position of the Asian currencies especially yuan and the tolerance levels of the RBI will dictate further movement of the Indian rupee.
“The Indian rupee is hovering around 66.05-66.50 levels. The next trigger will be the movement of the Asian currencies especially yuan and RBI’s own comfort levels regarding the down side,” Banerjee said.
“Indian rupee can remain within a range of 65.50 and 67.00 levels against the US dollar. In case, the pair moves above 67.00, the risk of a spiral towards 68.50 or 69.00 can arise.”
The rupee closed the week at 66.15 to a dollar on Friday, down 10 paise from its previous close of 66.05. The rupee had touched an intra-day high of 66.21 on Friday.
On Thursday the rupee gained by 9 paise and closed at 66.05 to a US dollar from Wednesday’s close of 66.14.
The recovery in global crude oil prices coupled with outflow of funds from Indian equity and bonds markets has dented the Indian rupee’s value against the US dollar.
Stable world markets coupled with hopes of a healthier global economic growth and demand lifted the Indian basket of crude oil prices to $44.28 a barrel on Thursday.
Another major catalyst for the rupee’s woes has been the devaluation of yuan, intended to boost Chinese exports.
China’s central bank devalued yuan by two percent on August 11. This was the biggest devaluation of the Chinese currency since 1994. The currency fell again by another two percent on August 12 panicking the world economy.
The yuan has fallen by 4.6 percent till now since August 11.