Foreign reserves drop $15.5 billion in steepest ever fall

India’s foreign exchange reserves for the last fortnight have dropped by more than $10 billion each week. For the week ended October 24, RBI data shows that reserves slipped $15.5 billion, or 5.65%—the largest drop ever—to $258.4 billion.

The decline was a result of major intervention by RBI in forex markets and a fall in the valuation of reserves as the euro slipped against the dollar. Due to the RBI measures, on Friday the rupee closed at 49.44/6 against the dollar, an improvement of 23 basis points. Last Friday, the euro fell to its lowest level in two years against the dollar, while the UK pound traded at a five-year low.

“The change in foreign currency assets is partly because of changes in the value of the dollar against the euro, yen and other currencies during the period,” RBI’s weekly statistical supplement noted. In the first three weeks of October, India’s foreign exchange reserves dipped $32.50 billion, on top of a fall of around $5.4 billion in September.

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Gold crashes ahead of festivals

Spot gold prices hit a one year low and slipped below Rs 12,000 per 10 gram in Mumbai while spot gold in London hit a 13-month low of $703.45 an ounce on a wave of long liquidations in the international markets exacerbated by below expected gold sales ahead of Diwali in India, the world’s largest consumer of the metal.

Local gold spot prices fell by 2-3% on Thursday in line with the trends in world markets.Experts said a rising dollar vis-à-vis euro & pound and flight of cashs trapped investors looking to liquidate their position in all commodities pulled down gold.

The euro fell to the lowest in almost two years against the dollar, while the pound traded near its lowest in more than five years. Spot gold traded at Rs 11,640 per 10 gm in Mumbai on Thursday, down by nearly Rs 300 and Rs 11,541 per 10 gm in Ahmedabad,down by Rs 600 per 10 gram over the previous day. On the MCX platform, gold December futures also fell to the day’s low of Rs 11,601 per 10 gram,down by nearly Rs 900 over the previous day.

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Marketts end 2 day rally, Sensex dips 513 points

Key equity indices snapped their two-day gains and ended in the negative terrain on Wednesday. Intense selling pressure, coupled with weak global cues and sustained selling by foreign funds, forced the market to remain under pressure throughout the day.

The 30-share Sensex of the Bombay Stock Exchange (BSE) plunged by 513.49 points, or 4.81%, and closed the day at 10,169.90 points.

Earlier in the day, the Sensex opened with a negative gap and touched an intra-day high of 10,484.45 points and fell to a low of 10,128.22 points. The broader Nifty of the National Stock Exchange (NSE) also lost 169.75 points or 5.25%, ending at 3,065.15 points.

Amitabh Chakraborty, president-equity at Religare Securities Ltd, said, “Japanese and Korean markets were down significantly. This spooked the sentiment further. The dollar has strengthened against all major currencies but the euro is down sharply.” Intense selling was witnessed in metals, realty and banking sector stocks, which were the worst hit among the BSE sectoral indices.

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