The Hindu Business Line : Forex reserves up by $1.04 b

INDIA'S foreign exchange reserves surged by $1.04 billion for the week ended June 17, after two consecutive weeks of decline, during which they fell by a cumulative $1.303 billion.

According to the data released by the RBI today, the reserves increased to $139.566 billion from $138.526 billion in the previous week.

Analysts said that the increase is due to revaluation of currencies (following the appreciation of dollars against some other currencies) and inflow of funds.

Foreign currency assets rose by $1.045 billion to touch $133.616 billion for the week under review.

Gold and Special Drawing Rights remained unchanged at $4.376 billion and $ 4 million respectively. India's reserve tranche position in the IMF fell by $6 million to $1.573 billion.

During the week, foreign institutional investments saw an outflow of $208.2 million, from the equity market, according to SEBI figures.

According to the treasury head at a private bank, since the forex reserves have risen despite a fall in the euro and FII outflows during the week in question, the rise could be attributed to an increase in foreign direct investment or external commercial borrowings. Since 50-60 per cent of the reserves are held in dollars, if dollar appreciates, the reserves could increase, he said. During the week, the rupee had appreciated from 43.67 on June 13 to 43.55/56 on June 17. The Euro was at $1.2085 during the beginning of the week concerned, a nine-month low against the dollar. However, it closed the week at $1.21.

In terms of the outlook this week, the domestic currency will remain in the range of 43.45-43.60, unless a correction in the Sensex drives the rupee beyond this range. There have been steady FII inflows and healthy demand and supply have been driving the market, the treasury head said.

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