India's forex reserves fall $273.8 million to $312 billion

KOLKATA: India’s foreign exchange reserves dipped for two consecutive weeks as the valuation of its euro and gold holdings shrunk on account of fall in euro and gold price.

The reserves fell $274 million in the week to May 30 to $312.383 billion, RBI’s latest weekly statistical supplement said. It fell by $2.269 billion in the week to May 23.

“The dip may be a reflection of change in valuation of other basket of currencies and gold held as reserves,” said KN Dey, senior foreign exchange consultant.

RBI holds reserves in foreign currencies and gold and foreign currency assets expressed in dollar terms include the effect of appreciation or depreciation of non-US currencies such as euro, pound and yen.

Foreign currency assets fell $269.3 million to $285.292 billion, RBI said.

The euro fell to a four-month low against the dollar after the European Central Bank lowered interest rates this week. In fact, the currency fell 3% from highs near $1.4000 after ECB President Mario Draghi prepared the market in early May for a possible policy action.

The ECB cut its key lending rate to 0.15% from 0.25% and lowered its deposit rate to -0.1% from 0%,

The gold price has also been under pressure on weak global cues.