Foreign exchange reserves dipped $860 million during the week ended September 25, largely on account of revaluation of non-dollar assets in reserves vis--vis the dollar.
The latest figures released by RBI on Friday indicate that the total foreign exchange reserves, including gold and special drawing rights (SDR reserves currency with the International Monetary Fund) dipped $860 million to touch $279.9 billion during the week ended September 25.
Almost the entire dip in reserves was on account of the dip in foreign currency assets, which fell $855 million. The value of SDR and reserves with IMF dipped $4 million and $1 million, respectively, during the week.
"The dollar has been strengthening sharply against major global currencies in the past two weeks. This could have resulted in revaluation of non-dollar assets in reserves," said Navin Raghuvanshi, associate vice-president of Development Credit Bank. Foreign institutional investors were, however, net buyers during the week, he added.
This means that the positive impact of capital inflows during the week were neutralised on account of the revaluation of non-dollar assets in reserves.
Almost 40% of the reserves is believed to be comprised of non-dollar assets, including the sterling pound, yen, euro and the yuan, though no central bank makes its currency composition of reserves public.
In other developments, the Centre has kept its ways and means advances (WMA) account with RBI vacant during the week ended August 21. WMA is a facility, under which the government (state as well as the Centre) can borrow from the central bank to meet its daily revenue mismatches. While borrowings within the limit is at the prevailing repo rate, borrowings above the agreed limit (between the government and RBI) is at 2% higher than the repo rate.
State governments on the other hand have reduced their outstanding WMA by Rs 783 crore to Rs 227 crore as on September 25.