There is a visible slowdown in RBI intervention in the forex markets. Forex reserves rose only $200 million in the latest week ended May 9. After two consecutive weeks of a dip in the reserves pile-up, foreign exchange reserves rose only $200 million to touch $312.7 billion during the week ended May 9. The entire growth in reserves during the week has been on account of growth in foreign currency assets.
All other components of reserves — gold, SDR and, reserves with IMF remained unchanged. Of late, though forex assets expressed in dollar terms are slowing down, those expressed in rupee terms are showing a strong growth. This could mean that the central bank is piling up currencies that are depreciating against the dollar.
Foreign exchange reserves expressed in dollar terms include the effect of appreciation and/or depreciation of non-US currencies such as euro, pound sterling and yen. These are called SDR currencies as they comprise the basket of currencies used to calculate the IMF currency SDR (special drawing rights). In addition, RBI also holds a small portion of its reserves in non-SDR currencies such as the Chinese yuan, swiss franc and even the Canadian and Australian dollar.
In the other developments, unspent revenue parked with the central bank touched Rs 3,340 crore as on May 9, up Rs 590 crore over the previous week’s levels. In order to contain its fiscal deficit figures, the Centre often goes slow on spending even though revenues are buoyant at times. It parks its unspent revenue with RBI, for which it does not earn any return. Though the states have not resorted to ways and means advances (WMA) — a temporary overdraft to meet its revenue mismatches, the states have increased their WMA exposure by Rs 545 crore during the week to Rs 617 crore as on May 9.
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