MUMBAI: Data released by the Reserve Bank of India on Saturday showed the reserves rose by $1.11 billion in the week ended September 5, taking the rise for 2003 to $17.07 billion, with weekly accretions averaging $488 million. The central bank has been mopping up surplus dollars from the market to temper a rise in the rupee, which has gained nearly five per cent so far in 2003 to trade near three-year highs. "There were very good investment inflows this month," said V Ravikumar, treasurer at the Bangalore-based ING Vysya Bank. "Essentially, investor sentiment on the local equity market is very strong because of the feel-good factor on the economy." Foreign funds' net investments in Indian shares totalled $465.10 million between September 1 and 10. This was a substantial 17.2 per cent of the $2.7 billion invested through 2003 so far. Investments have surged since May on expectations that good rains would boost the farm-dependent economy. The central bank expects growth in the year ended March 2004 to exceed its forecast of six per cent made in April. The benchmark 30-share Bombay index -- Sensex -- has surged some 50 per cent from a six-month low hit in late April. Inflows by way of deposits from overseas Indians were also adding to the flood of dollars in the country, analysts said. Investments in local bank rupee deposits, even if hedged for the currency risk, yield around 1.2 per cent more than what a dollar investment would yield. Foreign currency remittances by way of trade, especially trade of cheap technology services, were also flowing in. The dollar's global decline on the back of disappointing US jobs data would have also boosted the value of the reserves, which are partly held in euro, sterling and yen, Ravikumar said. DOLLAR BOND REDEMPTION The maturing of a multi-billion dollar bond scheme early next month could dent the reserves, but only slightly as at least half the redemptions are expected to be reinvested locally. Around $5.5 billion will flow out of the country on October 1, when the Resurgent India Bonds scheme matures. The outflows will be met with by dollars the central bank has bought from the forward market, and from its reserves. The bonds were issued in 1998 by the country's largest bank, State Bank of India, on behalf of the Government to shore up the external finances after some countries slapped sanctions on India for its nuclear tests. At that time, India' s reserves were under $30 billion.