The revaluation loss on account of appreciation of the dollar against other currencies over the year stood at Rs 1,762.94 crore against Rs 1,350.73 crore during the previous year.

The EFR is also utilised for replenishing the Exchange Equalisation Account (EEA) to meet the exchange losses on accrual basis in respect of liabilities under schemes involving exchange guarantees provided by the Reserve Bank, like funds parked by financial institutions.

The balance in the EEA as on June 30, 1998, amounted to Rs 639 crore and has fully provided for the exchange difference on foreign currency funds parked by Indian financial institutions, which are expected to be withdrawn by March, 1999.

The RBI, in its annualreport, has said that since it no longer gives exchange guarantees and schemes which enjoyed such guarantees are coming to a close, the EFR will not come under pressure in the future on this account. The EFR, however, comes under pressure whenever there is an appreciation of the rupee against gold, dollar and other currencies.

In order to gauge the magnitude of the impact of these market movements on EFR, the RBI has said that a one per cent appreciation of the rupee against the dollar at the current level of foreign currency assets will result in a drawdown of the EFR by Rs 1,018 crore.

Similarly, an appreciation of the dollar against other currencies by one per cent will deplete the EFR by about Rs 340 crore. Also, a one per cent fall in gold prices will result in the erosion of the EFR by about Rs 130 crore.

The EFR as on June 30, 1998, was equivalent to 22.96 per cent of the foreign currency assets of the RBI against 9.6 per cent as on June 30, 1997.