MUMNAI: A sharp surge in the gold prices in the global markets has helped enhance India’s foreign exchange reserves by $430 million during the week ended October 02.
According to the data released by the Reserve Bank of India, the total foreign exchange reserves including gold and special drawing rights (SDRcurrency with the International Monetary Fund) rose $430 million to touch $280.34 billion during the week ended October 02.
This is because the value of gold in reserves surged $488 million on account of a sharp rise in international gold prices while the value of foreign currency assets dipped $33million during the week.
The central bank’s gold holdings of 11.5 million troy ounce has not changed for years now as it does not trade in gold like other central banks do. According to RBI, the central bank, gold in reserves is valued at the average London market price during the month.
The price of gold during the month rose by around 5% to close to $1000 by end September. Analysts including major research firms like J P Morgan and CLSA expect the price of gold to surge sharply in the days to come on the back of weak dollar.
As per the updated money supply figures the total stock of money comprising cash currency and deposits with the banks amounted to Rs 50, 95, 812 crore as on September 25, up Rs 23,493 crore (0.5%) over the previous fortnight’s levels. Currency with the public and term deposits rose Rs 2,990 crore, and Rs 5,105 crore respectively, demand deposits rose Rs 26,331 crore during the fortnight . While other deposits with the central bank dipped Rs 10,933 crore.
The annual money supply growth now stands at 19%, marginally lower than previous year’s 19.5%. In the other developments, the government has parked over Rs 38,000 crore as surplus with the central bank during the week ended.
The government does not earn any interest by parking such funds points out an analyst with a bond house. But it helps rein in liquidity in the system he added. Already banks parked on an average over Rs 100,000 crore daily with the RBI in reverse repo under its daily liquidity adjustment facility.
While both the central and state governments have kept their ways and means advances (WMA) vacant during the week ended September 18. WMA is a facility under which the government (state as well as the centre) can borrow from the central bank to meets its daily revenue mismatches.
While borrowings within the limit is at the prevailing repo rate, borrowings above the agreed limit (between the government and RBI) is at 2% higher than the repo rate.
Source : The Economic Times