India's reserves lose shine as gold prices fall

Date

10/4/2015 5:04:54 AM

(MENAFN- Khaleej Times)

Weakening gold prices and a strengthening dollar dented Indian foreign exchange reserves (forex) in the week ended July 31. Forex reserves for the week under review plunged by $187.6 million and stood at $353.46 billion. The reserves had reported an increase of $322 million to $353.64 billion in the previous week (July 24). The growth that time had come after four consecutive weeks of decline.

The data furnished by the Reserve Bank of India (RBI) in its weekly statistical supplement showed that India's forex reserves were negatively impacted by devaluation of gold prices.

"There was a good build-up in reserves due to the efforts of RBI in buying dollars. The plunge in gold prices washed out those gains" Anindya Banerjee senior manager for currency derivatives with Kotak Securities said.

The Reserve Bank is pretty active in the forward purchase markets since the last 20-22 months. It sells dollars whenever the rupee crosses the Rs.64 mark and buys when it falls below Rs63 to a dollar. Though at a very short range experts believe that RBI seems to be comfortable with the rupee ranging anywhere between Rs63.20-Rs64.30 per dollar.

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