India’s foreign exchange reserves plunged by $1.327 billion for the week through September 5 after the Reserve Bank of India offloaded dollars to curb currency volatility.
The Indian currency got battered after the U.S. Federal Reserve announced that it may bring forward the timetable for interest rates increases earlier than investors expect. This would in turn boost the appeal of U.S. bonds and entice global funds away from emerging markets.
The forex reserves totaled $317.313 billion, reported the India’s central bank through its weekly statistical bulletin. RBI Governor Raghuram Rajam announced a week earlier that the central bank is readying itself for an increase in U.S. interest rates by piling up enough forex reserves and reducing volatility in the foreign exchange market.
The current level of Indian FX reserves can meet around eight months of imports, reported the Economic Times of India.
The foreign currency assets, an important mainstay of the reserves, plunged by $1.029 billion to steady at $290.364 billion. Gold reserves plunged $241 million to $20.933 billion.
Meanwhile, Pakistan’s foreign exchange reserves fell 0.3 percent in the week through September 5, data published by the State Bank of Pakistan showed.
The foreign exchange reserves fell $26 million to $8,693 million, down from $8,719 million a week earlier. SBP paid $61 million for external debt over the week, with no significant official inflow reported.
Pakistan’s total FX reserves, which includes net foreign reserves stored in other banks aside from the SBP, was $13,414.8 million, while the net FX reserves held in banks totaled $4,721.4 million in the week to September 5.
Pakistan’s FX reserves have grown over 50 percent in the 2013-14 financial year. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
To contact the reporter of this story; Jonathan Millet at john@forexminute.com
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