The Hindu Business Line : Forex reserves rise by $253 million

CONSEQUENT to a slowdown in the flow of foreign investment in Indian equities, India's forex kitty saw a meagre accretion of $253 million for the week ended April 8, as per the latest RBI statistics.

During the week under review, total reserves were at $141.457 billion as against $141.204 billion in the previous week. In fact, there has been a steady deceleration in the reserves' growth over the past four weeks.

Analysts ascribe the slowdown in foreign institutional investor (FII) inflows to the rising interest rates and downbeat trade data in the US. As per SEBI statistics, FII flows during the week under review were $102.7 million. In the earlier week, FII inflows saw a fall of $181.5 million, while for the week ended March 25, inflows were at $61.7 million.

According to the head treasury of a private bank, most of the FIIs have invested to the optimum and are awaiting an opportune time to invest further. "This is a temporary lull in FII inflows. There are dedicated funds. They will most probably invest again if the Sensex falls by another 200 points," he said.

As per the Weekly Statistical Supplement of the RBI, foreign currency assets grew by $262 million to touch $135.534 billion as on the week ended April 8. Foreign currency assets expressed in US dollar terms include the effect of appreciation/depreciation of non-US currencies (such as the euro, pound sterling and yen) held in reserves. Gold reserves and special drawing rights remain unchanged at $4.5 billion and $5 million, respectively. However, the country's reserve tranche position in the International Monetary Fund fell by $9 million to $1.428 billion.

In the domestic financial markets, the rupee tumbled by around 12 paise against the greenback to end weaker at 43.82/83 per dollar, almost in tandem with the 200-point fall in the stock market. The strengthening of the dollar against other global currencies also kept the rupee bogged down, dealers said.

The bond market was volatile on Friday, following the announcement of the auction of two Government securities and an auction by the Kerala Government. The dealers said that the 7.38 per cent 2015 benchmark paper, which closed at Rs 102.40 (7.05 per cent YTM), is likely to reach levels between 7.20 per cent and 7.25 per cent after the auction.

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