The Hindu Business Line : Forex reserves rise $8.6 b in first half

The accretion to the country's foreign exchange reserves was $8.6 billion on a balance of payment basis (excluding valuation) during the first half of the fiscal.

Foreign investment, external commercial borrowings and banking capital were the major sources of accretion to the country's foreign exchange reserves during the first half of 2006-07, said an RBI release.

A gain in valuation, which reflects the appreciation of major currencies against the dollar, accounted for a rise of $5.1 billion in total reserves during the period April to September 2006, against a valuation loss of $5 billion in the corresponding period in the previous year.

Buoyed by the valuation of $5.1 billion, forex reserves recorded an increase of $13.7 billion during the same period, compared to an increase of $1.5 billion in the previous year.

For the week ended December 22, the reserves rose by $714 million, driven by an increase in foreign currency assets. India's forex kitty now stands at $176.233 billion

In the previous week (ending December 15), the forex reserves had increased by $75 million to $175.519 billion.

According to RBI's Weekly Statistical Supplement, foreign currency assets during the week under consideration increased by $712 million to $169.191 billion.

Foreign currency assets expressed in dollars include the effect of appreciation or depreciation in non-US currencies (such as euro, sterling and yen) held in reserves.

According to the chief forex dealer at a private bank, the increase was mainly due to the revaluation effect.

Gold and SDRs were unchanged at $6.494 billion and $1 million, respectively.

India's reserve position in the IMF decreased by $2 million to $547 million.

The rupee could appreciate to 44 as the strain on liquidity might prompt banks to sell dollars and generate rupees.