India''s forex reserves down $2.07 billion

Our Banking Bureau
17 January 2005

Mumbai: India's foreign exchange reserves fell by over $2 billion in the week ended January 7, largely due to a strengthening of the dollar, analysts said.

RBI data showed that foreign exchange reserves, which are expressed in US dollar terms, dropped to $129.112 billion from $131.178 billion a week earlier.

The dollar had strengthened relative to the rupee during that week when the Federal Reserve said it was worried about inflation and suggested it would keep lifting US interest rates.
Analysts said $1.5-$1.7 billion of the decline could be attributed to a revaluation of reserves.

The dollar has been rallying again in recent days as Washington promised a tighter budget and a strong dollar policy.

Foreign funds have also turned net sellers of Indian stocks. They sold a net $105.4 million worth of stocks in the past seven straight sessions after stocks soared to peak levels. For January so far, they are net buyers of a $16.8 million in stocks.