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Sunday, Jun 06, 2004

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Forex reserves up $1.248 b

Our Bureau

Mumbai , June 5

BUCKING the trend in the past couple of weeks, the country's foreign exchange reserves surged by $1.248 billion for the week ended May 28. This unexpectedly large accretion to the kitty was despite any significant dollar inflows. It was rather due to the gains from cross-currency movements, said analysts.

The reserves stand at $119.820 billion against $118.572 billion for the week ended May 21. The foreign currency assets stood at $114.326 billion, which mainly accounts for the surge in reserves as they have increased by $1.235 billion.

In the week ended May 21, reserves had dropped by $56 million, attributed to higher FII outflows. In the previous week, the inflow was merely $49 million.

The surge in reserves this week is attributed mainly to revaluation of dollar against the currencies in the basket of the RBI. In fact, the dollar had depreciated against major currencies such as the Sterling and euro during the week.According to an analyst, the increase in the reserves cannot be on account of fresh inflow during the week. It could partly due to gains made by RBI from its portfolio management.

Mr P. Mukherji, Senior Vice-President, Treasury, UTI Bank Ltd, said, "The surge in reserves could be on account of revaluation of dollar against the currencies like euro, Pound Sterling and others. Also, it could be attributed to FDI inflow."

The pound has appreciated to 1.8366 per dollar from 1.7833, which amounts to an appreciation of 2.98 per cent during the week. The euro rose to 1.2271 per dollar from 1.1960 at the beginning of the week, an increase of 2.60 per cent in the week ended May 28.

In spite of FIIs being net sellers during the week to the tune of Rs 492.91 crore, the forex reserves showed the significant increase.

For the week ended May 28, the gold position and the SDRs remained stable at $4.191 billion and $2 million respectively. RBI reserve position in the IMF increased by a small $13 million, to touch $1.301 billion during this week.

For the week ended June 4, the rupee closed at 45.11/12 against the dollar as it appreciated 35 paise during the week up from 45.4650 at the week's beginning.

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