RBI may lower weight of dollar in forex basket
04 Jul 2009
The weight of the dollar in the RBI's basket of currencies that is used to decide the value of the rupee is likely to be reduced in the face of the falling value of the greenback in overseas markets, Suresh Tendulkar, chairman of the prime minister's economic advisory council, said.
He said the Reserve Bank of India will soon take a call on the issue and such a move was quite possible.
"The basket may undergo change. That's up to the Reserve Bank of India. They have to make a call," he said.
"I would not be surprised if they change it," he said.
Earlier today, the RBI released the balance of payments (BoP) data for 2008-09 on its website (www.rbi.org.in). On the basis of these data, sources of variation in foreign exchange reserves during 2008-09 have been compiled.
During 2008-09, there was a decline in foreign exchange reserves, RBI said in its release.
The foreign exchange reserves (including the valuation effects) declined by $57.74 billion during 2008-09 as against an increase of $110.54 billion during 2007-08. On balance of payments basis (excluding valuation effects), the foreign exchange reserves declined by $20.08 billion during 2008-09 as against an increase of $92.16 billion during 2007-08. The valuation loss, reflecting the depreciation of major currencies against the US dollar, accounted for $37.65 billion during 2008-09 as against a valuation gain of $18.38 billion during 2007-08. Accordingly, valuation loss during 2008-09 accounts for 65.2 per cent of the total decline in foreign exchange reserves.
Apart from the current account deficit, outflows under portfolio investments, banking capital and short-term trade credits were the other major sources contributing to decline in foreign exchange reserves during 2008-09.
