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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State Bank Of India mandated to raise $3 billion for Tata Motors

Tata Motors has mandated State Bank of India (SBI) as the sole lead manager to raise $3 billion that will fund the acquisition of Jaguar and other auto brands. The deal comes as a shot in the arm for the country's largest bank, which did not play much of a role in the earlier Tata-Corus deal.

Confirming the development, a senior SBI official said, "For Tata Motors' acquisition corpus, we have already initiated the process for raising debt worth $3 billion in the overseas market through a syndicated approach. Citibank, Standard Chartered, BNP Paribas, JP Morgan, Tokyo Mitsubishi UFJ and Mizuho Financial Group are the other banks that will pool the resources. We may shortly approach a few Indian public sector banks, too."

The Tata group wants the acquisition corpus to be ready by April 10.

We expect to raise the requisite funds as a foreign exchange bridge loan of 12 to 15 months at around 4.29% in the overseas market. Given the reputation and credibility the Tata group enjoys across the globe, it will not be difficult for us to accumulate the requisite debt at this interest rate in spite of the tight liquidity condition in the overseas market," said the official.

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