Forex

Foreign exchange (forex) reserves have dipped $3.3 billion during the week ended July 4 on the back of equity sales by foreign portfolio investors. On the positive side, banks have increased their deposits as well as loans in June.

According to data released by the Reserve Bank of India (RBI) in its weekly statistical supplement (WSS), forex reserves, including gold and SDR (special drawing rights), dipped $3,393 million during the week ended July 4 to touch $308.4 billion.

While foreign currency assets dipped $3,389 million, reserves with the IMF dipped $10 million.
The value of gold in reserves rose $6 million. The value of SDR — currency with the IMF — remained unchanged during the week.

The $3,389-million dip in forex assets from the central bank during the week translates into a dip in rupee funds worth Rs 1,617 crore. This has resulted in a tight cash conditions in the money market, because of which rates in the overnight call money market have been rising above the bench mark policy rates.

Money market conditions remained tight despite the government has brought back Rs 16,513 crore parked with the central bank back into the system.

However, commercial banks have recorded a good business in June though a bulk of it has been concluded in the past few days, as banks tend to shore up their balance sheets at the end of a quarter. Bank deposits rose Rs 43,935 crore as on June 27, taking the outstanding deposits to Rs 32,79,468 crore.

Both demand and term deposits rose Rs 8,442 crore and Rs 35,493 crore, respectively, during the month. Bank lending rose Rs 48,654 crore to touch Rs 24,13,071 crore as on June 27.

While food credit dipped Rs 3,706 crore, non-food credit rose Rs 52,360 crore during the month. While bank investments in government and other approved securities dipped Rs 30,463 crore to touch Rs 9,89,717 crore. Both the Centre and states have not resorted to any ways and means advances (WMA) — a temporary overdraft to meet its revenue mismatches during the week.