The Hindu Business Line : Forex reserves up $319 m

THE country's forex reserves have increased by $319 million to touch $110.317 billion for the week ended March 26, 2004, as against $109.996 billion in the previous week, as per the latest RBI statistics.

Forex analysts ascribed the rise in reserves largely to a revaluation in RBI's basket of currencies, as during that week, the rupee appreciated by around 50 paise, due to `lack of RBI intervention in the market'.

The domestic currency began its rally on March 23, when it firmed up by 21 paise over its previous close to end at 44.87. Since then, in a matter of 10 days, the rupee has appreciated by over 100 paise to close at 43.7350/7450 on April 2.

Currency experts ascribe the surge in rupee value to a number of factors such as the inherent weakness in dollar and increasing FII interest in India as an investment destination, etc. But speculation has also been rampant about RBI's intent to allow the rupee to appreciate in such a sudden and sharp manner, without lending any significant support to the greenback.

In fact, some analysts hypothesise, that with the introduction of the Market Stabilisation Bonds, some amount of correction will soon take place in the appreciating trend of the rupee.

Meanwhile, according to RBI's weekly statistical supplement, foreign currency assets of the country also grew by $319 million, to touch $106.125 billion as on the week ended March 26. Gold Reserves remained steady at $4,190 billion while Special Drawing Rights were at $2 million.