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Forex kitty continues to rise, scales new high at $341.4 billion |
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KOLKATA: India's foreign exchange reserves surged $1.39 billion in the week to March 27, scaling a new high at $341.378 billion, the Reserve Bank of India (RBI) data showed on Friday.
This is the second straight week the reserves have risen as RBI purchased dollars from the open market to prevent the local currency from appreciating. The rupee closed Friday at 62.09 a dollar against 62.41/42 a dollar last Friday. Overseas investors are pouring dollars into Indian equities and debt with the economy gaining from Narendra Modi's reform push.
Foreign investors helped Indian corporate bonds market to grow 32% year-on-year to a record.`3,56,382 crore between April 2014 and February 20.
India's strong economic fundamentals lured overseas investors back, forex dealers said. RBI Governor Raghuram Rajan said last week that the central bank was fully prepared to deal with volatility in the Indian markets.
The Indian reserves hold nearly 20-25% of non-dollar currencies. In the week under review, foreign currency assets rose by $1.35 billion to $316.24 billion, the RBI data showed.
Foreign currency assets constitute the bulk of reserves and reflect the change in the value of reserves held in other global currencies, including the euro, pound and yen due to exchange rate movements.
The Indian reserves hold nearly 20-25% of non-dollar currencies. In the week under review, foreign currency assets rose by $1.35 billion to $316.24 billion, the RBI data showed. Foreign currency assets constitute the bulk of reserves and reflect the change in the value of reserves held in other global currencies, including the euro, pound and yen due to exchange rate movements.
The RBI said the foreign currency assets, expressed in US dollar terms, include the effect of appreciation or depreciation of non-US currencies such as the pound sterling, euro and yen held in reserve.
India's reserve position with the International Monetary Fund (IMF) in the week ended March 27 increased by $8.5 million to $1.29 billion. The value of special drawing rights (SDRs) was higher by $26.2 million at $4 billion.
Gold reserves in dollar term remained unchanged at $19.84 billion. They had plunged by $346.2 million in the week ended March 6. According to analysts, RBI is building up reserves to absorb any future global financial shock like the one witnessed in June 2013.
"The RBI is building up the reserves to counter any future financial shocks like the one which was witnessed at the time the tapering announcements were made. Apart from that, the reserves will also act as a support to the rupee," Anindya Banerjee, Kotak Securities senior manager, currency derivatives, said. The RBI is cautious about the US Fed's stand that the rate hike might take place in the later part of the year.
With higher interest rates in the US, foreign portfolio investors (FPIs) are expected to be led away from emerging markets such as India.
Source : economictimes.indiatimes.com
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