The Hindu Business Line : Forex reserves increase by $623 million

THE country's foreign exchange reserves showed a modest gain of $623 million for the week ended August 26, after a fall of over $1 billion in the earlier week, on account of inflows into the stock market and buying of dollars by RBI, said dealers.

According to Reserve Bank of India's Weekly Statistical Supplement, the country's foreign exchange reserves increased to $143.841 billion, as against $143.218 billion in the earlier week. In the earlier week, the reserves had fallen by $1.157 billion.

Foreign currency assets for the week ended August 26, rose by $616 million to touch $1,37,999 billion. Foreign currency assets expressed in dollar terms include the effect of appreciation/depreciation of non-US currencies (such as euro, sterling, yen) held in reserves.

Gold and Special Drawing Rights remained unchanged at $4.395 billion and $4 million respectively. The country's reserve tranche position in the IMF increased by $7 million to touch $1.443 billion, during the week under consideration.

The FII inflow into the equity market during the week at $88.1 million was also higher than in the earlier week, according to the Securities and Exchange Board of India Web site.

The head of treasury of a private bank said that forex reserves would show a rise in the subsequent weeks, as RBI had intervened and bought dollars and the dollar had also weakened against most global currencies. At the same time flows into the market through ECBs and foreign borrowing have continued.

In the next week dealers expect the rupee to trade between 43.85 and 44.15. If the market is convinced that there would be no rate hike by the US Fed in the near term, then the rupee could go back to 44 levels, traders said.

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