Contraction by $1.39 billion seen in India's forex kitty

A fall in India's foreign exchange reserves was noticed to $251.702 billion as on 1 May from $253.091billion a week earlier. This made a drop of $1.39 billion.

It was confirmed by Reserve Bank of India in its weekly statistical supplement on Friday that changes in foreign currencyassets, expressed in dollar terms, include the effect of appreciation or depreciation of othercurrencies held in its reserves such as the euro, pound sterling and yen. It should be noted that India's reserve tranche position in the International Monetary Fund is included in foreign exchange reserves. It was specified by RBI that the fall mainly came to scene due to revaluation of currencies and a decrease in value of gold assets held by RBI.

A decline by $346 million to $9.23 billion was witnessed in gold reserves since the gold price declined in the week. It should be noted that during the week where special drawing rights remained static, the reserve position with the IMF also remained unchanged.

Foreign institutional investors bought equities worth $402 million (about 2,000 crore), during the period under consideration.