The Hindu Business Line : Forex reserves up $987 million

Accretion to the country's foreign exchange reserves has slowed down in the week ended April 14, 2006, after adding over $2.5 billion every week, for three weeks in a row. According to the Reserve Bank of India's Weekly Statistical Supplement, the reserves rose by $987 million to touch $155.196 billion.

In the previous week the reserves had increased by $2.587 billion to touch $154.209 billion.

The reserves increased as the central bank continued to buy dollars. But the rate of increase slowed down, as FIIs were net sellers in the equity market in the week under consideration.

According to the RBI figures, foreign currency assets increased by $989 million to touch $148.681 billion during the week. Foreign currency assets, expressed in dollar terms, include the effect of appreciation or depreciation of non-US currencies such as euro, sterling and yen.

The total FII outflow from the equity market was $475.9 million against inflows of $112.20 million in the previous week.

The euro was steady against the dollar at levels of $1.2120, in the week under consideration.

According to the chief forex dealer with a private bank, the central bank was purchasing dollars during the week under consideration. "Nationalised banks could have been buying dollars on behalf of the central bank for the week in question. There was no significant movement in the euro and hence there could not have been any revaluation effect," said the dealer.

Gold reserves and SDRs were unchanged at $5.75 billion and $3 million respectively.

The reserve position in the IMF fell by $2 million to touch $757 million.

The rupee could trade in the range of 45.10/45.20 in the next week. "Globally, if the dollar weakens against other major currencies then the rupee could follow suit. However, oil-related demand could keep it range-bound," said a dealer.