Forex Reserves Dip to $226.445 B on FII Outflows

Mumbai: For the second consecutive week, the country’s forex reserves came down by $2.551 billion to $226.445 billion for the week ended August 17, 2007.

This was due both to FII outflows ensuing from the US sub-prime loan crisis, plus the RBI’s latest reductions on external commercial borrowings.

Market players also ascribe the drop in reserves to the reappraisal of other currency assets.

For the week under consideration, the total FII outflow stood at Rs 3,905.70 crore. But, market dealers felt that the outflows would only be a temporary fact and would not have any permanent affect on the market situation.

According to the RBI’s Weekly Statistical Supplement the forex reserves decreased by $346 million to $228.996 billion for the week ended August 10, 2007.

Total foreign currency assets fell by $2.550 billion to $219.103 billion, whereas foreign currency assets as expressed in dollars that comprise the effect of admiration or decrease in non-US currencies (euro, sterling and yen) held in reserves.

The home currency also came down to a low of 41.71 in the same week. Dealers said this was in response to the US subprime situation and the break up in the home equity market that led to huge dollar selling.