Forex reserves dip below $300-bn mark/news07012012

Foreign exchange reserves continued their slide for the second consecutive week, falling by over $4.18 billion to $296.69 billion, slipping below the long-held $300-billion mark.

The huge drop in the reserves in the week ended December 30 was a result of a fall in the core foreign currency assets (FCAs) and gold reserves, the Reserve Bank of India ( RBI) said.

The overall reserves had slipped by $1.23 billion to $300.86 billion in the previous reporting week.

FCAs, a major component of the forex kitty, fell by $2.72 billion to $262.93 billion for the week under review, according to the RBI data.

FCAs, expressed in US dollars, include the effect of appreciation or depreciation of the non-US currencies such as the euro, pound and yen, held in the reserves.

The gold reserves were down by $1.42 billion to 26.62 billion, the apex bank said.

Faced with massive volatility in the rupee which has seen its value erode by 20% since August, RBI is reported to have arrested or limited the fall by selling its dollar reserves.

According to some estimates, it has sold over $4 billion in the recent months.

For the week under review, the special drawing rights also were down by $19 million to $4.43 billion, while India's reserve position in the International Monetary Fund slipped by $12 million to $2.71 billion, the data showed.
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