The Hindu Business Line : Foreign investors pump $10 b into forex kitty

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Foreign investors pump $10 b into forex kitty

Our Bureau

Mumbai , April 1

FOREIGN investments (both FII and FDI), at $10.1 billion, accounted for over 38 per cent of the $26.4-billion accretion to the country's forex reserves in the nine months ended December 2003. The accretion had been significantly lower in the corresponding period of the previous fiscal at $16.3 billion.

During the nine-month period, portfolio investment was at $7.6 billion and foreign direct investment (FDI) at $2.5 billion, totalling to foreign investment of $ 10.1 billion, according to the data released by the Reserve Bank of India.

On the current account front, the increase was by $3.2 billion, up from $2.9 billion in the corresponding period of the previous year.

Change in valuation of the basket of currencies held by the apex bank led to an increase of $5.4 billion ($3.7 billion). During the period under review, Euro, Japanese Yen and the British Pound had appreciated substantially against the dollar leading to the valuation gain, said the RBI release.

Short-term credit increased to $2.4 billion ($0.4 billion) while banking capital decreased to $5.6 billion ($6.8 billion). Within banking capital, NRI deposits increased to $3.5 billion ($2.4 billion).

External commercial borrowings during the nine-month period decreased to $ -3.7 billion ($ -2.0 billion) while other items in capital account increased to $3.4 billion ($1.4 billion).

Other items under capital account mainly reflect the difference between customer data on imports/exports and banking channel data ($5.0 billion, external assistance ($-1.8 billion) and rupee debt service ($-0.3 billion). Errors and omissions accounted for 12.9 per cent of the accretion.

For April-December 2003, the current account surplus increased to $3.2 billion from $2.9 billion during April-December 2002.

There has been a significant rise in the net inflows through the capital account heads at $17.8 billion during April-December 2003 as against $9.7 billion in the corresponding period of the previous year.

There has been significant increase in capital flows from investment by foreign institutional investors (FIIs), short-term credit and non-resident deposits.

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