The Hindu Business Line : RBI moves forex assets to ‘safer’ avenues

As per a report released by RBI on Friday, its deposits with foreign banks and external asset managers have come down considerably as on March 2008. At the same time, deposits with other central banks, Bank for International settlement (BIS) and IMF have increased substantially.

Deposits with foreign commercial banks and external asset managers declined to $6.01 billion as on March 31, 2008 from $35.39 billion a year ago. During the same period, deposits with other central banks, BIS and IMF increased to $189.64 billion, from $137.34 billion.

Investments in securities have also gone up. Out of the $299.23 billion foreign currency assets as on March 31, 2008, $103.56 billion were invested in securities. A year ago, investments in securities were only $67.21 billion out of the total foreign currency assets of 239.95 million then.

The foreign currency assets are invested in multi-currency multi-portfolio as per the RBI norms.

Better returns

According to the report, the return on foreign currency assets, gold, after accounting for depreciation, increased to 4.6 per cent in 2006-07 from 3.9 per cent during 2005-06.

The forex reserves, which were barely enough to meet the country’s imports for three weeks in 1991, were adequate to cover more than 15 months’ as on March 31, 2008.

As per the latest figure released on Friday, the country’s reserves stands at $308.62 billion, marginally up from the March end figure of $ 299.23 billion.

Foreign Direct Investments, NRI deposits, foreign portfolio investments and external commercial borrowings are among the sources of accretion to forex reserves.

While the country has enough forex reserves for meeting 15 months import requirements, its current account deficit has been increasing in the last three years. Current account deficit increased to $17.4 billion (1.5 per cent of GDP) during 2007-08; this means the country’s imports exceed its exports.

Related Stories:
Forex Reserves Management: IMF guidelines and Indian practice
Rs 30,000-cr hole in currency valuation account

More Stories on : Forex | RBI & Other Central Banks

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page