Fx reserves may fall by $39 bn: Goldman

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New Delhi, October 1:: Decline in capital inflows as a result of ongoing global financial turmoil may see India's foreign exchange reserves depleting by USD 39 billion during 2008-09, says a report by global banker Goldman Sachs.

India's foreign exchange reserves, which were around USD 310 billion in March 2008, have been declining steadily and may go down to USD 271 by the close of current financial years, the report said.

The decline would mainly be on account of rising current account deficit, it said, adding "capital inflows fell to USD 13.2 billion (in Q1 2008-09) from USD 17.3 billion in Q1 of 2007-08 and USD 25.4 billion in the previous quarter (Jan-March)."

As per the latest RBI data, the country's foreign exchange reserves declined to USD 292 billion as on September 19, 2008, which can be attributed to higher trade deficit and declining portfolio investment.

Pointing out that the current account deficit will remain high during the year, the Goldman Sachs report said, "it would be a bigger concern with oil at USD 150 a barrel than at current prices."

It further added, "with oil prices coming off substantially, one of the biggest threats to the current account deficit has been alleviated."

Even in the event of a sudden stop in capital flows, the report said, country's buffer of forex reserves would be sufficient to fund the current account and external debt payments.