Forex reserves drop at USD 306.61 bn

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Mumbai, Aug 1 (UNI) India's foreign exchange reserves dropped by USD 50 million to USD 306.61 billion on July 25 from 307.11 billion a week earlier, the Reserve Bank of India (RBI) said in its weekly statistical supplement here today.

The forex reserves even shrinked by about Rs 9.60 bn in the last two months, which was a record high at USD 316.17 bn in late May this year.

Market analysts say the decline was due to dollars given by the central bank to refiners in exchange for their oil bonds in order to meet their demand after sharp rise in oil prices.

The suspected intervention in the currency market by the central bank to support the falling rupee through Liquidity Adjustment Facility (LAF) mode also squeezed the reserve kitty in the past two months, analysts said.

Meanwhile, Foreign Currency Assets reserve declined by USD 50 mn to USD 296.87 bn during the week, from USD 297.37 billion in the previous week. However, the gold reserves and special drawing rights (SDR) reserve remained unchanged at USD 9.21 bn and USD 11 mn, respectively. While, reseves with International Monetary Fund (IMF) dropped at USD 515 mn from USD 517 mn, RBI stated.

The central bank said foreign currency assets, expressed in dollar terms, included the effect of appreciation or depreciation of other currencies held in its reserves such as the euro, pound sterling and yen.

The foreign exchange reserves include India's Reserve Tranche Position in the IMF, the central bank said.

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