The Hindu Business Line : Forex reserves increase by $1 billion

THE country's forex reserves surged by $1.001 billion for the first time in the new fiscal, during the week ended April 22, 2005, after recording modest gains in the last three weeks.

During the week ended April 22, reserves surged to $142.546 billion as against $141.545 billion in the previous week.

Analysts ascribed the accretion to a revaluation in the central bank's basket of currencies, foreign currency loans and selling of dollars by exporters.

The US dollar weakened against the euro and the sterling during the week under review, causing the revaluation to take place, analysts said. The euro closed stronger against the greenback on Friday at $1.3066, after touching a high at $ 1.31 on Thursday, as compared to its levels on Monday at $ 1.2977. Similarly the sterling pound closed stronger on Friday at $1.9133 against Monday's levels at $ 1.8990.

For the week under review, foreign currency assets rose by $985 million to touch $136.595 billion. Gold reserves and SDRs remain unchanged at $4.5 billion and $5 million, respectively. The country's reserve position in the IMF rose by $16 million to touch $1.446 billion. Incidentally, the week in question saw an FII outflow of $126.1 million, as per SEBI figures.

On April 29, the rupee ended at 43.54/55 against the US dollar, higher than Monday's close of 43.7050. The gain was fuelled by speculation about the revaluation of the Chinese yuan and heavy selling by banks and corporates.

The rupee may lose some of the gains if the revaluation of the yuan is confirmed to be a rumour, said an official from a private bank.

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