``More administrative steps will be taken if and when they become necessary,'' Finance Minister Palaniappan Chidambaram told reporters in New Delhi. ``It has come as a big relief that inflation in the current week is statistically stable'' compared with last week's figure, the minister said.
According to the latest RBI figures, total forex reserves, including gold and SDR, dropped slightly to $371 million during the week ended May 2 to touch $312.5 billion. While foreign currency assets rose $371 million, value of gold in reserves dipped $612 million.
Interestingly, forex reserves expressed in rupee terms rose Rs 13,226 crore to Rs 12,70,134 crore. Though it will not be the entire explanation for this, the revaluation of non-dollar currencies expressed in dollars is undoubtedly a significant factor here.. Apart from the yen and the rupee, most other currencies weakened against the dollar during the week in question. As per the updated money supply figures, the total stock of money in the system amounted to Rs 40,20,531 crore as on April 25, up Rs 1,065 crore over the previous fortnight’s levels.
Also new data available from the Reserve Bank of India from the period March 2007 to March 2008 shows that although forex reserves rose by more than 50% during this period, the deposits left by the central bank with foreign banks around the world dropped from $46.7 billion in March 2007 to $6 billion in March 2008.
These funds were being placed with other central banks and mutlilateral agencies where the returns are relatively low. India’s foreign exchange reserves aggregated $309 billion at the end of March 2008, rising to $313 billion by the end of April, making India the sixth-largest custodian of forex reserves in the world.
India's rupee had its biggest weekly loss in a decade last week as record-high crude oil prices spurred demand for dollars from refiners and global funds sold indian shares. The rupee declined 2.3 percent during the week to 41.60 per dollar at Friday's 5 p.m. close in Mumbai, according to data compiled by Bloomberg, making it the biggest weekly decline since May 1998.
The rupee is the second-worst performer this year among Asia's 11 most-traded currencies as a 31 percent jump in the commodity's price raised concern that import costs will rise and widen the nation's current-account deficit.
The value of India's imports in the year to March 31 rose 27 percent to $236 billion, widening the trade deficit to $80.4 billion, the government said on May 1. The shortfall in India's current-account widened to $5.4 billion in the three months ended Dec. 31 from $3.7 billion a year earlier and $4.7 billion in the preceding quarter, the central bank said on March 31.
The recent drop in the rupee follows last year's 12.3 percent gain, its biggest in more than three decades.
India needs to pay more for energy even as global funds turned net sellers of local equities. Overseas investors sold $275.9 million more Indian shares than they bought this week, compared with net purchases of $263.2 million last week, data provided by the Securities & Exchange Board of India show. The benchmark Bombay Stock Exchange Sensitive Index, or Sensex, fell 4.9 percent on the week, ending a four-week advance.
The rupee's fall ``is reflecting global uncertainties, involving both the trade and capital accounts,'' Central bank Governor Yaga Venugopal Reddy told reporters in Shillong, in the north-eastern Meghalaya state. ``Trade and current-account deficits may marginally deteriorate this year, but this will be comfortably financed by capital inflows,''.