The Hindu Business Line : Forex reserves up $933 m

TRADE flows, NRI remittances and FII debt inflows have shored up the country's foreign exchange reserves by nearly $1 billion in the last one week, according to the latest RBI statistics.

Reserves have surged by $933 million to touch $77.010 billion for the week ended April 25, compared to $76.077 billion in the previous week.

Forex traders and analysts ascribe the sharp escalation in the reserves primarily to the central bank's intervention in trying to arrest a sharp appreciation in the rupee. According to them, the domestic currency, which has been buoyed by tremendous dollar inflows, is emerging as an area of concern for exporters.

"The RBI has been aggressively buying dollars through State-run banks to prevent a steep strengthening in the rupee. In fact, at the moment, the apex bank appears to be providing the currency strong support at the 47.30/33 levels," a forex dealer with a public sector bank said.

However, the market is rife with scepticism about the RBI's ability to hold off rupee appreciation for long in the wake of such dollar inflows.

The dealers contend that not only are the heavy inflows aiding rupee appreciation, but the trend is also supported by the general weakening of the greenback against international currency majors like the euro, pound and the yen. The rupee closed the week strong at 47.3450 levels on Friday. The currency is expected to continue its climb against the greenback next week.

Meanwhile, according to the weekly statistical supplement of the RBI, foreign currency assets increased by $933 million to touch $73,472 billion for the week ended April 25. Gold reserves remained steady at $3.534 billion while special drawing rights were at $4 million.

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