The Hindu Business Line : Forex reserves up by $1.3 billion

FOR the second consecutive week, the country's forex reserves swelled by over $1 billion.Reserves grew by $1.314 billion for the week ended November 12, to touch $123.538 billion, according to the data released by RBI. In the previous week, total reserves were at $122.224 billion.

According to banking analysts, revaluation of the foreign currency assets with the central bank was the primary reason for the rise in reserves. During the week, the US currency had depreciated against other major currencies. Euro had seen a sharp appreciation against the dollar, which also added to revaluation gains.

Foreign currency assets rose by $1.312 billion to $117.845 billion as per the Weekly Statistical Supplement (W.S.S) of RBI. Foreign currency assets expressed in dollar terms include the effect of appreciation or depreciation of non-US currencies such as, Euro, Sterling and Yen held in reserves, according to the W.S.S.

The Reserve Tranche Position in the IMF saw a minor accretion of $2 million to $1.337 billion.

During the week, good foreign investment inflows were also seen continuously, dealers said. As per Securities and Exchange Board of India (SEBI) data foreign investments worth $210 million were made in Indian equity and debt markets during the week.

Meanwhile, in the week ended November 12, the central bank has injected funds ranging between Rs 3,665 crore and Rs 14,075 crore into the markets, as banks borrowed funds through the repo facility of RBI. This is indicative of the liquidity crunch in the markets, even as inter-bank call rates are ruling over 6.00 per cent, dealers said.

In the past week, the domestic currency held its ground at a five month high, closing levels were in the range of 45.04 to 45.10 against the dollar. The currency appreciated to as high as 44.96 per dollar.

In the domestic debt market, liquidity pressures as also surplus funds aggregating Rs 31,000 crore with the central government led to cancellation of Rs 5,000 crore dated securities auction. Despite higher than expected inflation at 7.76 per cent, bond prices improved by about 40 paise, on expectation of lower inflation in the coming week, due to easing in oil prices.