India’s Forex Reserve Decreased
The foreign reserve of India decreased $9.94 billion during the week ending October 10, 2008. It stands at $274 billion right now. The fall in foreign reserve is mainly due to selling of dollars by the Reserve Bank of India. The reserve bank is taking many measures to control the depreciation of rupee against the dollar. The sale of dollars also aimed to check rupee depreciation. Country’s reserves in international monetary fund also posed decline of $3 million during the previous week.
Foreign reserve is falling continuously from three weeks including gold and special drawing rights (SDR). Reserve bank sold dollar in good amount last week as foreign portfolio investors did good sale of stocks bring the share market down. Indian forex reserve is declining since the start of this financial year. The country is at forth place in terms of holding foreign exchange reserves in Asia. Other major foreign reserve holders are China, Japan and Taiwan in Asia.
Foreign reserve of other countries is also falling. South Korea’s reserves declined by $25 billion during this period while foreign reserve of Taiwan also registered a decline of $10 billion between July and September. SBICAP Securities economist, Sunandan Chaudhuri said that the country needs to pay attention toward liberalized foreign direct investment (FDI) policy to improve its foreign reserve kitty.