News: Indian forex reserves gain $689 m

(BL 29/07/2006) Mumbai - The forex reserves have gained by $689 million due to an increase in foreign currency assets.

According to the Reserve Bank of India's Weekly Statistical Supplement, the reserves rose by $689 million to touch $163.35 billion for the week-ended July 21. In the previous week, the reserves had fallen by $601 million to $162.66 billion.

Foreign currency assets increased by $682 million to touch $156.40 billion during the week. Foreign currency assets, expressed in dollar terms, include the effect of appreciation or depreciation of non-US currencies such as euro, sterling and yen.

According to the chief forex dealer with a private bank, while the euro was unchanged during the week under consideration the British pound had gained. "The pound had appreciated from $1.8383 on July 14 to $1.8590 on July 21.This could have caused a revaluation effect and led to a slight rise in the reserves," said the dealer.

Market participants said that the central bank had not intervened in the forex market during that week.

There was, however, an FII outflow of around $112 million from the equity market during the week under consideration.

Gold reserves remained unchanged at $6.18 billion while SDRs increased to $7 million. The reserve position in the IMF was unchanged at $763 million.

Dealers said the rupee could appreciate to 46.50 next week if the US GDP data released late Friday evening were unfavorable to dollar.