The Hindu Business Line : Forex kitty swells as dollars come in billions

THE country has become the pilgrim centre for dollars with the greenback surge continuing unabated. For the week ended September 5, the forex reserves have grown by $ 1.11 billion to top $87 billion.

Forex reserves now stand at $ 87.365 billion, as against $ 86.255 billion in the previous week, as per the latest figures released by RBI, propelled largely by a revaluation of the foreign currency assets held by the central bank.

During the week, foreign currency assets increased by $ 1.018 billion to touch $ 83.642 billion.

According to the weekly statistical supplement of RBI, "foreign currency assets expressed in dollar terms include the effect of appreciation and depreciation of non-US currencies held in reserves''.

Forex and economic analysts believe the trend of dollar inflows flooding the domestic markets is likely to continue and aid the growth of reserves, due to a number of factors including the interest rate differentials between global and Indian rates.

``A large part of the dollar flows has been deployed in the equity markets by foreign institutional investors, which has given a major boost to the stock markets in the recent past. All this is indicative of the increased interest in India as a growth market'', said an analyst.

There is still a cloud hanging over the projections of a global economic recovery, despite the positive data released by the US. The conditions in Europe and Japan are not heartening and the US alone cannot drive such a global recovery, say some. Even so, the Indian economic indicators are positive, another reason that the flow of funds into India might accelerate in the near future, the analyst added.

According to analysts, international investors are eyeing Indian commodity and real estate markets with tremendous growth potential. Yet, the domestic currency ended the week weaker by around 10 paise at 45.80/81 on Friday, on increased demand for the greenback from corporates and banks rushing to cover short dollar positions. However, most dealers feel, the near term outlook on the rupee continues to remain bullish in the absence of any bad news.

`` The dollar inflows are steady and liquidity is good. Market participants were initially cautious due to the change of guard at RBI. But now it seems there won't be much action till the credit policy. Traders are playing it by the ear. The rupee is likely to stay in a wide band of 45.60 - 45.80 levels'', said a dealer.

Article E-Mail :: Comment :: Syndication

Stories in this Section
Chhabrias add `interest' to Herbertsons offer

Increase in gross bank credit

Forex kitty swells as dollars come in billions

Role for media in development: PM

`Statute changes needed to avoid curbs on press'

Rangarajan calls for free access to information