News: Indian Forex reserves up $2 bn

(BL 25/11/2006) Mumbai - Forex reserves for the fortnight ended November 17 increased by a massive $2.071 billion to touch $170.355 billion, according to the figures released by the Reserve Bank of India. This is the fifth week in a row that forex reserves have climbed.

In the previous week, forex reserves moved up by $1.168 billion to touch $168.284 billion. This is probably the highest accretion to the forex kitty in the current year.

The huge increase in reserves was mainly because of dollar buying by the central bank, as a liquidity inducing measure, said V. Rajagopal, Chief Dealer, Forex, Kotak Mahindra Bank.

FII inflows into the domestic equity market during the week were Rs 803 crore.

As per the Weekly Statistical Supplement of the RBI, foreign currency assets increased by $2.074 billion to touch $163.637 billion for the week under review. Foreign currency assets expressed in US dollar terms include the effect of appreciation or depreciation of non-US currencies (such as euro, sterling and yen) held in reserves.

Gold reserves and SDRs remained unchanged at $6.068 billion and $1 million, respectively.

India's reserve position in the IMF fell by $3 million to touch $649 million.

Next week the rupee will see support at levels of 44.50, said R.V.S. Sridhar, Vice-President, UTI Bank.

Monday could see the dollar inflows doubling, as the US markets were closed for Thanksgiving on Friday.