The Hindu Business Line : Forex reserves rise $4 b

Mumbai, Aug. 10 The forex kitty rose by $3.992 billion to $229.342 billion for the week ended August 3, backed by strong FII inflows and continuous intervention by the Reserve Bank of India in the forex market.

“The strong FII inflows and constant RBI intervention to cap the appreciation of rupee has attributed to the increase in reserves,” said Mr M Natarajan, Vice-President and Head-Trading, Forex, Fixed Income and Derivatives, IndusInd Bank.

The reserves had increased by $3.307 billion to $ 225.350 billion for the week ended July 27, said the RBI’s Weekly Statistical Supplement.

The foreign currency assets were up by $3.892 billion to $221.988 billion. Foreign currency assets, as expressed in dollars, include the effect of appreciation or depreciation in non-US currencies (euro, sterling and yen) held in reserves.

The gold reserves went up by $100 million to $6.887 billion while SDRs remained the same at $12 million. The country’s reserve position in the IMF also remained unchanged at $455 million.

Market participants, however, feel that the curbs on external commercial borrowings could limit the inflow of fresh equity inflows.

“With the slowdown in inflows, the accretion to forex reserves will be limited,” said Mr Natarajan.

Bank Credit

Gross bank credit increased by Rs 2,866 crore to Rs 19,17,231 crore for the fortnight ended July 27, according to the Reserve Bank of India.

The gross bank credit was inclusive of food credit, which went down by Rs 1,728 crore to Rs 41,059 crore and non-food credit went up by Rs 4,594 crore to Rs 18,76,172 crore.

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