Forex reserves dip $1.8 billion in July on valuation changes

KOLKATA: The crash in gold price and euro's depreciation of euro against dollar make India's foreign exchange reserves poorer by about $1.8 billion in the last five weeks.

Euro and gold are important contributors to the country's forex reserves and a change in valuation affect the total reserve position, forex dealers said.

Statistics thrown up by Reserve Bank of India showed that reserves fell by $2.134 billion between June 26 and July 17 before gaining a mere $322 million in the week to July 24.

Reserves now stands at $353.648 billion.

"Reserves fell due to the dip in valuation of euro and gold," said Paresh Nayar, FirstRand Bank's head forex and fixed income.

Gold prices fell steadily for the last six week after China dumped the yellow metal on its exchange, leading to further surge in dollar demand.

The pressure on euro against the dollar aggravated ever since European Central Bank president Mario Draghi reiterated his commitment to providing unprecedented stimulus to the euro area.

The rupee breached the 64-mark once again Friday to close at 64.14 against the dollar on month-end demand from oil companies.

Sentiment on dollar has also strengthened globally with Federal Reserve's decision to leave interest rates unchanged.