News: Indian forex reserves pushing $200 b mark

(BL 07/04/2007) Mumbai - India's foreign exchange reserves have vaulted by around $45 billion during the just ended fiscal 2006-07 to $199.179 billion — nearly kissing the $200-billion mark. The reserves stood at $154.209 at the beginning of the last fiscal.

The forex kitty has seen a surge of $1.433 billion to $199.179 billion in the week ended March 30. During the previous week, the reserves expanded by $1.789 billion. Forex reserves have seen an accretion of around $4.7 billion in three consecutive weeks.

K. Harihar, Head, Treasury, Development Credit Bank, said there had been strong dollar inflows in the forex market during the week under consideration. "While there have been FII inflows, companies have been repatriating External Commercial Borrowings parked abroad due to year-end considerations," he said.

Treasury officials said companies may have also been repatriating funds and locking it in Indian deposits to take advantage of the high interest rates.

The FII inflows during the week have been around $244 million.

Treasury officials said that strong FII, FDI and ECB inflows would continue to shore up the country's forex reserves and the $200-billion mark was well within reach.

The Indian rupee, which has been consistently gaining against the dollar, closed at an 8-year high of 42.92 on Thursday.

Foreign currency assets during the week increased by $1.532 billion to $191.924 billion during the week under consideration, said the RBI's Weekly Statistical Supplement.

Foreign currency assets, as expressed in dollars, include the effect of appreciation or depreciation in non-US currencies (euro, sterling and yen) held in reserves.

Gold reserves dipped by $99 million to $6.784 billion. SDRs and the country's reserve position in the IMF remained unchanged at $2 million and $469 million, respectively. Forex reserves have seen strong accretion since November as the RBI has been intervening to rein in the appreciating rupee. The RBI is believed to have bought $8 billion from November to January and around $12 billion in February.