The Hindu Business Line : Forex leaps over $200-b mark

Currency markers
FII inflows in April at about $428.40 m in equities, $291.7 m in debt.
Dealers expect reserves to climb to $275-280 b this fiscal.
Gold reserves remain unchanged.

Mumbai April 13 Forex reserves have vaulted over the $200-billion mark for the week ended April 6 on strong dollar inflows. In the past year, the forex reserves have grown by more than $45 billion, as reserves stood at $154.209 billion for the week ended April 7, 2006. In the 1991-92 crisis year, India had $500 million in its pocket.

"As the Indian economy continues to do well, significant dollar inflows are expected into the domestic markets. The current rate of rise in forex reserves is likely to be sustained," said Mr Ravi Pai, Head-Forex and Derivatives, HDFC Bank.

FII inflows in April have been about $428.40 million in equities and $291.7 million in debt.

India's forex kitty increased by $1.141 billion to touch $200.320 billion for the week ended April 6. The forex kitty had seen a surge of $1.433 billion to $199.179 billion during the previous week. According to forex dealers, reserves could climb to $275-280 billion in 2007-08.

Gold reserves and Special Drawing Rights remained unchanged at $6.784 billion and $2 million respectively. The country's reserve position in the IMF dropped by $10 million to $459 million.

RBI buys

Forex reserves have seen strong accretion since November even as the RBI has been buying dollars to rein-in an appreciating rupee. According to dealers, RBI is believed to have bought $19.7 billion from November to February. The rupee on Friday strengthened by 32 paise to close at 42.52/53.

Foreign currency assets during the week increased by $1.151 billion to $193.075 billion during the week under consideration, said the RBI's Weekly Statistical Supplement.

Foreign currency assets, as expressed in dollars, include the effect of appreciation or depreciation in non-US currencies (euro, sterling and yen) held in reserves.

"One reason for a rise in forex reserves is the appreciating Euro. Euro has appreciated to $1.34 levels. Euro has gained significantly against the greenback as the Euro zone has been performing well in GDP terms while a dear money policy has kept its inflation at about 2 per cent," said Mr K. Harihar, Head-Treasury, Development Credit Bank.

At the end of December 2006, with outstanding foreign exchange reserves at $177.3 billion, India held the fifth largest stock of reserves in the emerging markets and the sixth largest in the world.