Rs 168.92 to a dollar? Well, thats what the Reserve Bank of India has effectively shelled out for every dollar added to its forex kitty so far this fiscal.

As on March 31, 2008, the RBIs outstanding foreign currency assets stood at $299.23 billion, which, at the exchange rate of Rs 39.97-to-a-dollar for the fiscal-end, was valued at Rs 11,96,023 crore. Since then, the forex assets have risen to $305.92 billion as on June 6. But in the same period, the rupee weakened to Rs 42.79-to-a-dollar, taking the value of the $305.92 billion of forex assets to Rs 13,09,030 crore.

Simply put, during the current fiscal, the RBIs forex assets have gone up in dollar terms by $6.69 billion, while increasing by Rs 1,13,007 crore in rupee terms. That translates into an incremental exchange rate of Rs 168.92-to-a-dollar.

Thus, for every dollar accumulated in its reserve chest this fiscal, the central bank has paid the equivalent of Rs 169 or so. As against this, it cost the RBI just Rs 33.5 for adding a dollar to its reserves during 2007-08, which saw an unprecedented upward pressure on the rupee amidst record central bank purchases of dollars from the market.

The current years incremental exchange rate of Rs 168.92-to-the-dollar is the highest ever: even more than the Rs 69.27 for 1992-93 (when the exchange rate fell from Rs 25.89 to Rs 31.30-to-the-dollar at the fiscal-end), Rs 61.36 for 1997-98 (from Rs 35.93 to Rs 39.46) and Rs 70.19 for 2000-01 (from Rs 43.62 to Rs 46.64).

The RBIs forex assets are valued daily on a mark-to-market basis. Any depreciation in the rupee leads to an upward revaluation of the assets, which gets reflected in an expansion in reserve money the base rupee liquidity created by the central bank whenever it lends to the Government and banks, or mops up foreign currency from the market.

At the same time, revaluation gains are booked into a separate Currency and Gold Revaluation Account, forming part of the RBIs non-monetary liabilities. The increase in net forex assets, courtesy rupee depreciation, is offset by a corresponding rise in net non-monetary liabilities.

The RBIs latest weekly statistical supplement shows that during the current fiscal (till June 6), the net forex assets have risen by Rs 1,12,073 crore. But these have been tempered by an increase in the RBIs net non-monetary liabilities by Rs 89,673 crore, along with a contraction in its net credit to the Government (Rs 13,984 crore) and banks (Rs 4,460 crore).

As a result, the overall reserve money expansion till now during 2008-09 has been only Rs 3,956 crore. This is lower than the Rs 39,984 crore for the same period of 2007-08, which registered a Rs 48,830 crore decline in RBIs net non-monetary liabilities on the back of a strengthening rupee.