Forex kitty gains on dollar value in April-Dec.

More than foreign portfolio investments in stock markets or foreign direct investment (FDI), it was the valuation gain on account of the fall in the value of the dollar that contributed maximum to the foreign exchange reserves of the country.

The valuation gains, reflecting the depreciation of the US dollar against the major currencies, accounted for $20.185 billion during April-December 2009 as compared with a valuation loss of $33.375 billion during April-December 2008. “Accordingly, valuation gains during April-December 2009 accounted for 64.1 per cent of the total increase in foreign exchange reserves,” the Reserve Bank of India said.

“During April-December 2009, there was an accretion to foreign exchange reserves mainly on account of valuation gains,” the RBI said. Also, inflows under foreign investments, non-resident Indian deposits and short-term trade credits have contributed significantly to the increase in foreign exchange reserves during April-December 2009. The foreign exchange reserves (including the valuation effects) increased by $31.485 billion during April-December 2009 as against a decline of $53.755 billion during April-December 2008.

Source : Indian Express