The Hindu Business Line : Forex reserves jump by $1.5 b

THE New Year sees further increases in the accretion to the country's foreign exchange reserves. For the week ended January 2, the kitty grew by $1.513 billion to touch $102.103 billion.

According to the RBI's latest statistics, the foreign currency assets increased by $1.336 billion to $97.885 billion, gold reserves jumped by $177 million to $4.215 billion whereas special drawing rights were steady at $3 million.

Through most of December 2003, the weekly increase to the reserves had been at the pace of over $1 billion. However, this week's increase is not the highest ever; the week ended November 21, 2003, the kitty had registered an increase of $1.710 billion taking the toll to $95.373 billion.

FII investment for December 2003 had touched a historic high of $1.310 billion or Rs 5,957 crore with $1.185 billion going into the equity markets and a mere $125 million going into the debt markets.

According to Mr M.A. Ravi Kumar, Regional Head, Global Markets, Standard Chartered Bank's forecast, "The foreign exchange reserves of the country is expected to go to $115-120 billion by end of 2004. FII and FDI into the country are expected to increase and so is the large portion of NRI funds parked outside India. As this population gradually shifts the monies into India, seeing the country as an attractive investment destination, the reserves will surge further."

As for the reasons leading to the latest increase in the reserves, explained the chief dealer in a foreign bank, "The central bank had been very aggressive in buying up dollars during this period. While a part of the increase is due to the revaluation in the gold holding, it could also be partly due to the maturing of buy-sell swaps purchased by the central bank in the forward market."

The basket of currencies held by the Reserve Bank also saw a revaluation and a notch up in terms of value, as a result of the appreciation of the euro, the Japanese yen and the British pound against the dollar during the week.

Dollar supplies were seen coming into the country by way of the usual FII investments and exporter receivables.

Meanwhile, the Indian rupee ended stronger on Friday at 45.4450 in its value against the dollar, having made gains of 18 paise over the week fuelled by robust dollar supplies.