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Barclays sees forex reserves scaling past $380 billion this year |
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MUMBAI: British brokerage Barclays has said it sees the Reserve Bank continuing to shore up the forex reserves, which have been hitting new highs for many months, to the tune of $50 billion to take the overall kitty to over $380 billion by December.
For the week ended February 26, forex reserves had increased to $328.12 billion, the highest ever, according to the RBI data, which also showed that it had net bought $12.2 billion from markets in January alone.
Stating that RBI has a decent headroom to build more forex reserves which are currently at life-time high of $over 328 billion, Barclays India chief economist Siddhartha Sanyal said RBI could mop up another $50 billion this year.
"Considering that CAD is likely to be near flat next fiscal at around 0.1 percent, all the capital inflows can potentially be mopped up by RBI. So, on a very conservative basis, the RBI can mop up around $50 billion for the reserves, taking the present reserves to the north of USD380 billion in about a year's time," Sanyal told reporters here.
Earlier this week, the central bank had said it scooped up USD16.4 billion in reserve as of December end, taking the overall reserves to USD320 billion. Since then it has been on a continuous rise.
"The foreign exchange reserves in nominal terms, which includes the valuation effects, increased by $16.4 billion during the April-December period of FY15 compared to $1.8 billion during the same period of preceding year," according to the RBI data. This was despite a valuation loss of $14.8 billion in the period as against a loss of $6.6 billion in the year-ago period, due to the appreciation of the US dollar against major currencies along with the decline in gold prices.
The Reserve Bank has also said it was net buyer of a record $12.137 billion in January from the spot market, against a net selling of $1.929 billion a year ago, to contain rupee volatility and to increase forex reserves. During the month, the apex bank bought $15.259 billion from the market and sold $3.122 billion.
In December 2014, RBI had net bought $6.739 billion after it bought $17.908 billion and sold $11.169 billion. In the entire FY14, RBI net purchased $8.992 Billion--bought $52.394 billion and sold $43.402 billion.
Source : economictimes.indiatimes.com
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