Foreign exchange reserves fall due to Brexit
Posted on: 02/Jul/2016 10:38:50 AM
India�s foreign exchange reserves fell by USD 3 million over the week ending June 24. That was day that Britain voted to leave the European Union, or the EU. The decision triggered a collapse across global financial markets.
On what is now termed as Black Friday, the BSE Sensex went down 1,000 points. It then recovered losses to close 605 points lower that day. The Indian Rupee fell sharply to close at 68.01 to the US dollar. India`s foreign exchange reserves declined USD 3.02 billion in the week ended June 24 to USD 361 billion, according to data published by the Reserve Bank of India, or the RBI, on Friday.
A USD 2.99 billion in foreign currency assets, or FCAs, is the main reason for the fall. FCAs fell to USD 336 billion. Gold reserves, however, remained unchanged at USD 20.32 billion.
During the previous week ending June 17, India�s foreign exchange reserves had hit an all-time high of USD 363.83 billion amid global turmoil due to uncertainty prevailing in financial markets over which way the British people would vote in the referendum.
A well known economist says, India is bracing for a huge dollar outflow when the FCNR deposits of more than USD 20 billion come up for redemption later this year. Some USD 25 billion in foreign currency non-resident or FCNR B deposits raised to stabilise the rupee in 2013 will be maturing in Sep-Nov. Expect some short-term impact on the balance of payments, strain on domestic liquidity conditions and a temporary bout of rupee volatility.
On what is now termed as Black Friday, the BSE Sensex went down 1,000 points. It then recovered losses to close 605 points lower that day. The Indian Rupee fell sharply to close at 68.01 to the US dollar. India`s foreign exchange reserves declined USD 3.02 billion in the week ended June 24 to USD 361 billion, according to data published by the Reserve Bank of India, or the RBI, on Friday.
A USD 2.99 billion in foreign currency assets, or FCAs, is the main reason for the fall. FCAs fell to USD 336 billion. Gold reserves, however, remained unchanged at USD 20.32 billion.
During the previous week ending June 17, India�s foreign exchange reserves had hit an all-time high of USD 363.83 billion amid global turmoil due to uncertainty prevailing in financial markets over which way the British people would vote in the referendum.
A well known economist says, India is bracing for a huge dollar outflow when the FCNR deposits of more than USD 20 billion come up for redemption later this year. Some USD 25 billion in foreign currency non-resident or FCNR B deposits raised to stabilise the rupee in 2013 will be maturing in Sep-Nov. Expect some short-term impact on the balance of payments, strain on domestic liquidity conditions and a temporary bout of rupee volatility.
