News: Indian forex reserves up $702m

(BL 28/01/2007) Mumbai - The country's foreign exchange reserves have risen $702 million to $178.128 billion, for the week ended January 19, on the back of an increase in foreign currency assets. In the previous week, the forex reserves had gone up $841 million to $177.426 billion.

Foreign currency assets expressed in dollars include the effect of appreciation or depreciation in non-US currencies (such as euro, sterling and yen) held in reserves. Foreign currency assets have increased by $701 million to touch $171.068 billion, according to the RBI Weekly Statistical Supplement.

Treasury officials attributed the increase in reserves to central bank intervention in the forex market and revaluation. "During the week under consideration, there was speculation that RBI was buying dollars to rein in the appreciating rupee as well as to infuse liquidity in the system," said the chief forex dealer at a private bank.

While the euro edged up to $1.2965 on January 19 from $1.2935 on January 15, the yen fell to 121.25 from 120.45.

Gold and SDRs were unchanged at $6.517 billion and $1 million, respectively. India's reserve position in the IMF increased by $1 million to $542 million.

Forex dealers said the rupee is likely to be in the range of 44.20-44.30 next week. "As per the Real Effective Exchange Rate, the rupee is overvalued by 8.8 per cent. So, the central bank may continue to intervene if the rupee appreciates below 44.20," said the treasury official.