Nifty99000 100%

Sensex99000 100%

Article rating: No rating
Article rating: No rating
Article rating: 5.0
Article rating: 5.0
Article rating: 5.0
Article rating: 5.0
Article rating: 5.0
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: 4.0
Article rating: 5.0
Article rating: 3.3
Article rating: 5.0
RSS

News

Currency in circulation slows down since May on spike in crude, RBI selling dlrs: Report

Author: PTI/Monday, September 24, 2018/Categories: Currency

Currency in circulation slows down since May on spike in crude, RBI selling dlrs: Report

Mumbai, Sep 24 - The currency in circulation (CiC), which increased exponentially after the note ban in November 2016 under which as many as 99.9% of them returned to the system, has seen some slowdown in expansion since May this year likely due to higher fuel prices and Reserve Bank's intervention in forex market, says a report.

Currency in circulation increased from Rs 9 trillion in January 2017 to Rs 19.5 trillion as of September 14 this year. But since the beginning of May 2018, the same has been in the range of Rs 19-19.6 trillion, says the report.

"One possible reason can be people may be cutting back discretionary spending with the recent spurt in fuel prices, mostly in rural areas," says SBI Research in a report Monday.

The other factor could be to the extent RBI selling dollars directly from its foreign exchange reserves to designated dealers/banks thereby withdrawing rupee resources in return, thus reducing currency in circulation, it said.

The report, however, said such intervention, since taking place between banks, should not have major impact on systemic liquidity.

The third reason, though insignificant, could also be RBI replacing soiled notes, it added.

The decline in CiC is a seasonal phenomenon but this time it seems the decline is more than just seasonal and has continued beyond August, it noted.

The Reserve Bank's weekly data for the last 10 years shows a pattern in CiC decline in the last fortnight of every July, which is partly explained by the low cash demand from the agriculture sector.

The demand for currency increases after the monsoons as the harvesting begins in October followed by Rabi sowing, eventually giving rise to cash requirement.

The festive season also brings along its natural demand, which gets accentuated with buying of gold, automobiles, increasing the demand for currency, the report added.

Print Rate this article:
No rating

Number of views (194)/Comments (0)

rajyashree guha

PTI

Other posts by PTI
Contact author

Leave a comment

Name:
Email:
Comment:
Add comment

Name:
Email:
Subject:
Message:
x

Videos

Ask the Finapolis.

I'm not a robot
 
Dharmendra Satpathy
Col. Sanjeev Govila (retd)
Hum Fauji Investments
 
The Finapolis' expert answers your queries on investments, taxation and personal finance. Want advice? Submit your Question above
Want to Invest
 
 

Categories

Disclaimer

The technical studies / analysis discussed here can be at odds with our fundamental views / analysis. The information and views presented in this report are prepared by Karvy Consultants Limited. The information contained herein is based on our analysis and upon sources that we consider reliable. We, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and we are not responsible for any loss incurred based upon it. The investments discussed or recommended in this report may not be suitable for all investors. Investors must make their own investment decisions based on their specific investment objectives and financial position and using such independent advice, as they believe necessary. While acting upon any information or analysis mentioned in this report, investors may please note that neither Karvy nor Karvy Consultants nor any person connected with any associate companies of Karvy accepts any liability arising from the use of this information and views mentioned in this document. The author, directors and other employees of Karvy and its affiliates may hold long or short positions in the above mentioned companies from time to time. Every employee of Karvy and its associate companies is required to disclose his/her individual stock holdings and details of trades, if any, that they undertake. The team rendering corporate analysis and investment recommendations are restricted in purchasing/selling of shares or other securities till such a time this recommendation has either been displayed or has been forwarded to clients of Karvy. All employees are further restricted to place orders only through Karvy Consultants Ltd. This report is intended for a restricted audience and we are not soliciting any action based on it. Neither the information nor any opinion expressed herein constitutes an offer or an invitation to make an offer, to buy or sell any securities, or any options, futures or other derivatives related to such securities.

Subscribe For Free

Get the e-paper free