KOLKATA: India’s foreign exchange reserves rose $203 million in the week to June 6 as Reserve Bank of India purchased dollars from the foreign exchange market to prevent volatility in exchange rate amid strong dollar inflows. The reserves rose to $312.586 billion, breaking a two week’s consecutive fall.

The addition in reserves however remain muted because of the depreciation of euro in the global market. The euro component of the reserves was devalued because of the fall, leading to the modest rise in the reserves despite a strong dollar inflows and the central bank purchases.
RBI holds reserves in foreign currencies and gold and foreign currency assets expressed in dollar terms include the effect of appreciation or depreciation of non-US currencies such as euro, pound and yen.

The euro fell to a four-month low against the dollar after the European Central Bank lowered interest rates last week week. The European currency fell about 3% last week from highs near $1.4000 after ECB President Mario Draghi prepared the market in early May for a possible policy action. The ECB cut its key lending rate to 0.15% from 0.25% and lowered its deposit rate to -0.1 per cent from 0 per cent.