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The ratio of short-term debt to foreign exchange reserves increased to 5.3 per cent for March 2005, from 4.2 per cent in March 2004.

Mumbai , July 6

THE forex reserves were adequate to meet 14.3 months imports as on March 2005. This was against 17 months of import as on 2004, according to the RBI's report on Foreign Exchange Reserves, released on Wednesday.

The import cover of reserves is a traditional indicator of reserve adequacy.

The ratio of short-term debt to foreign exchange reserves increased to 5.3 per cent for March 2005, from 4.2 per cent in March 2004.

The ratio of volatile capital flows (defined to include cumulative portfolio inflows and short term debt) to reserves increased to 36.8 per cent from 30.6 per cent, during the same period.

The report said the return on foreign currency assets and gold decreased to 2.1 per cent in 2003-04 from 3.1 per cent during 2002-03, after accounting for depreciation, mainly because of lower interest rates and fall in prices of securities.

The foreign exchange reserves are invested in multi-currency and multi-market portfolios.

As on March 2005, out of the total foreign currency assets of $135.6 billion, $36.8 billion were invested in securities ($35.02 billion), $65.1 billion deposited with other central banks and Bank of International Settlement ($45.8 billion) and $33.6 billion were in the form of deposits with foreign commercial banks ($26.5 billion). In 2003, the International Monetary Fund designated India as a creditor under its Financial Transaction Plan (FTP).

Under this, India extended Special Drawing Rights (SDR) 5 million to Burundi in March-May 2003, SDR 43 million to Indonesia in December 2003, SDR 61 million to Uruguay, Haiti, Dominican Republic and Sri Lanka in 2004-05.

Thus, the total quantum of the country's contribution under FTP was SDR 459 million at end-March 2005, the report said.

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Forex reserves enough to meet 14 months' imports

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