Forex kitty rises $2.5 bn to $283 bn.

MUMBAI: The country’s foreign exchange reserves rose $2.5 billion during the week ended September 3, partly on account of revaluation of non-dollar assets and also of a surge in value of gold in reserves. While a subdued growth in credit offtake is pushing banks to park surplus resources in mutual fund schemes.

The country’s forex reserves rose $2.5 billion in the week ended September 3. The reserves are at $2,82,549 million. Foreign currency assets comprising, dollars, British pounds and euro, among others, rose $1,736 million during the week. The value of gold in reserves rose $730 million during the week.

While special drawing rights, or SDRs — the reserve currency with the International Monetary Fund — and the reserve capital with the IMF rose $14 million and $6 million, respectively.

During the week, both the euro and the yen weakened vis-à-vis the dollar. These two currencies together account for a big chunk of India’s non-dollar assets. As a result, this has resulted in revaluation of non-dollar assets in reserves, said a treasury official with public sector bank requesting anonymity.

In the banking sector, banks parked around `17,500 crore more in mutual funds (MFs) in the absence of a significant loan demand. Their outstanding investments amounted to `49,984 crore as on August 27.

Bankers said that they have not seen loans keeping the same pace of June, following a huge demand from telecom companies to pay for various spectra licence fees, at a recent banking seminar in Mumbai. As a result, in the subsequent period, banks have again started parking funds with MFs and other instruments like the commercial paper and certificate of deposits.

The updated money supply — cash, currencies and deposits — figures released by the central bank indicate that the total stock of money in the system amounted to `55,99,762 crore as on August 27, up `34,837 crore over the previous fortnight’s levels.

At the current levels, the annual growth in money supply works out to 15.1% compared with 19.9% a year ago. On the other hand, the central government didn’t resort to any short-term borrowings from the central bank. Such borrowings are resorted to by the government to meet its daily revenue mismatches.

These short-term borrowings are known as ways and means advances (WMA) — a facility under which governments borrow from the central bank to meet their daily revenue mismatches. States, however, had an outstanding borrowing amounting to `71 crore under the WMA facility as on September 3.

Source : economictimes.indiatimes.com