Forex kitty hits a low on RBI dollar sales

Kolkata: With the rupee coming under severe pressure due to the meltdown faced by Turkish lira, India's foreign exchange reserves are close to dipping below the $400-billion mark.

The Reserve Bank of India data showed that reserves fell $1.8 billion in the week to August 10 to $400.88 billion.

Foreign exchange dealers said that RBI was seen selling dollars to prevent the local currency from falling freely.

In July, the country’s trade deficit hit a five-year high of $18.02 billion, piling up pressure on the local currency. It has fallen about $26 billion from the record high of $426.082 billion seen on April 13. RBI sold $14.4 billion in the first quarter of the year as against a cumulative purchase of $8.8 billion in the corresponding quarter last year, Care Ratings said in a research note.

Foreign investment flows, however, turned positive after being negative in the first three months of the year. The debt and equity markets have seen $941 million inflows in August so far, Care Ratings said.

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