The Hindu Business Line : Forex reserves up $562 m at $121 b

FOREX reserves of the country have swelled by $562 million to $121.178 billion for the week ended October 29, 2004 against accretion of nearly $1 billion in the past week. The reserves in the previous week aggregated to $120.616 billion.

According to analysts, revaluation gains on the back of appreciation in major currencies such as yen, euro and pound sterling led to the accretion in reserves. During the week there was no major intervention by the central bank in the foreign exchange market in buying dollars, dealers said.

Foreign currency assets surged by $550 million to $115.651 billion compared to $115.101 billion in the previous week, according to RBI statistics. As per the weekly statistical supplement of RBI, foreign currency assets expressed in dollar terms include the effect of appreciation and depreciation of non-US currencies such as euro, sterling and yen held in reserves. Reserve Tranche Position (RTP) in the International Monetary Fund (IMF) showed a minor accretion of $8 million to $1.330 billion, while SDR position increased by $4 million to $5 million.

However, the reserves in rupee terms dipped by Rs 1,177 crore. This is primarily due to exchange rate fluctuation, as exchange rates have been declining in the recent past, traders said.

During the week, funds parked under repo and reverse repo auctions by the commercial banks with the RBI were in the range of Rs 5,955 crore to Rs 14,930 crore. On October 29, reverse repo bid aggregating Rs 5,960 crore was also conducted through 20 bids.

The nomenclature of repo auctions under Liquidity Adjustment Facility (LAF) has been changed with effect from October 29, as per the international standards. The repo auctions will be known as reverse repo auctions and reverse repo auctions will be known as repo auctions. During the week, the rupee scaled to new heights as it soared to a five-month high at 45.20/21 against the dollar. It has been showing a strong appreciating trend, which is likely to continue, dealers said.

Meanwhile, bond markets continued to be in turmoil with prices falling massively as the yields soared to two-year peaks. Call rates peaked to 6.5 per cent, ruling over the 5-per cent mark for most part of the week.