Mumbai: India’s forex reserves, which dipped below $600 billion, could rise again as the RBI engages in forex swap transactions, bankers say. The decl
Mumbai: India’s forex reserves, which dipped below $600 billion, could rise again as the RBI engages in forex swap transactions, bankers say. The decline in forex reserves was due to a $1.1-billion drop in the value of foreign currency assets and the value of gold. The drop in the forex assets factors in the depreciation in the euro and other currencies against the US dollar.
KN Dey of United Financial Consultants said, “One of the biggest reasons for the fall in the rupee is the Chinese yuan which has dipped by over 6% in the last seven days.” He added, “China is the biggest trade partner and the main competitor in exports. So it is expected that a sharp fall in the value of the CNY would result in a weakening of the rupee.”
The RBI might be not intervening to ensure that the rupee remains competitive. A weaker rupee is also seen as a self-correcting mechanism when the trade balance worsens. Imports have been rising in recent months, and the firm crude oil prices are adding to the import bill.
KN Dey of United Financial Consultants said, “One of the biggest reasons for the fall in the rupee is the Chinese yuan which has dipped by over 6% in the last seven days.” He added, “China is the biggest trade partner and the main competitor in exports. So it is expected that a sharp fall in the value of the CNY would result in a weakening of the rupee.”
The RBI might be not intervening to ensure that the rupee remains competitive. A weaker rupee is also seen as a self-correcting mechanism when the trade balance worsens. Imports have been rising in recent months, and the firm crude oil prices are adding to the import bill.
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