The Hindu Business Line : Forex reserves rise by $587 m

THE country's forex kitty has been enhanced by $587 million for the week ended June 18, after registering a decline for the previous two consecutive weeks.

The total reserves as on this date, grew to $119.932 billion against $119.345 billion for the week ended June 11.

Dealers ascribed the latest surge in reserves to a possible revaluation in the central bank's basket of currencies. Foreign currency assets of the country have increased to $114.659 billion from $114.072 billion past week, which is a surge of $587 million.

Foreign currency assets expressed in US dollar terms include the effect of appreciation or depreciation of non-US currencies such as euro, sterling and yen, according to the weekly statistical supplement of the Reserve Bank of India.

"The surge in the forex reserves could be on account of revaluation of reserves, as the inflows were in a small amount during the concerned week. As the inflows are not negative, the fear of a major outflow is not there among the market players. This surge cannot be indicative of a trend in the forex reserves position," said Mr P. Mukherjee, Senior Vice- President, Treasury, UTI Bank Ltd.

The FII inflow in the week concerned has been a mere $47.60 million, while the rupee had weakened in its value in the week closing on June 18 at 45.66/68 against the dollar, a five-and-a-half month low for the domestic currency.

After a volatile week of trading where it breached 46 levels against the dollar, the rupee closed at 45.83/84 on Friday.

Bond prices crashed by up to Rs 2 across maturities in the Government securities market on Friday.

Analysts said both the domestic debt and forex market will be in a wait-and-watch mode over the next week.