Forex reserves down $5 bn

MUMBAI: The country���s foreign exchange (forex) reserves dipped by a whopping $4.96 billion in the week ended June 13, the steepest dip in over two-and-a-half years.

The dip can be attributed to the amount of intervention the Reserve Bank of India (RBI) has done in the forex market by selling dollars in a bid to keep the rupee from breaching the 43-mark against the dollar.

The last time such a huge fall in reserves recorded was in December 2005, when there were huge redemption pressures on the central bank on account of the India Millennium Deposits (IMD) scheme of State Bank of India.

RBI has been consistently intervening in the forex market over the past couple of weeks, with the rupee under pressure from oil companies which bought dollars to provide for soaring crude prices. RBI has now started selling dollars to oil companies directly, in exchange for oil bonds, which has taken considerable pressure off the forex market.

Meanwhile, credit and deposits continue to record modest growth figures for the year. According to data released by RBI in its weekly statistical supplement (WSS) on Friday, bank credit growth stood at 25.9%. At current levels, a year-on-year bank credit stood at Rs 4.89 lakh crore.

Loans extended by banks during the fortnight ended June 6 touched Rs 23,80,418 crore, up Rs 16,001 crore, from the previous fortnight���s levels. While food credit dipped by Rs 5,105 crore, non-food credit moved up Rs 21,106 crore during the fortnight.

Simultaneously, aggregate deposits mobilised by commercial banks amounted to Rs 32,56,979 crore as on June 6, rising Rs 21,447 crore over the previous fortnight���s levels. While demand deposits rose Rs 2,026 crore, term deposits with commercial banks rose Rs 19,421 crore. Investments in government and other approved securities by banks rose Rs 6,181 crore to Rs 10,07,069 crore as on June 6.

The total stock of money in the system went up Rs 22,655 crore during the fortnight ended June 6, to touch Rs 40,99,957 crore. All components of money supply, currency, term deposits as well as demand deposits, recorded a strong growth during the fortnight.

At the current levels, the annual Y-o-Y growth in money supply stood at 21.4%, well above the central bank���s comfort levels of 17-17.5%.