India's forex reserves cross $110 billion
Monday, 05 April 2004, 19:30 IST
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NEW DELHI: India's foreign exchanges reserves have crossed the $110 billion mark with the inflow of $319 million during the week ended March 26, the central bank said in its weekly report Saturday. Fresh inflow of funds and the effect of appreciation/depreciation of various foreign currency assets led to an increase of $319 million in foreign currency assets during the last week of the 2003-04 fiscal ended March 31, the Reserve Bank of India (RBI) report said. The hardening of the rupee against the dollar saw India's Reserve Tranche Position (RTP) with the International Monetary Fund (IMF) dip by $5 million to $1.31 million. "The RTP may change from time to time due to India's transactions under the Financial Transaction Plan with the IMF as well as changes in SDR exchange rates vis-a-vis rupee and the US dollar," RBI stated. In a report on foreign exchange reserves released Mar 31, the RBI revealed that foreign investment accounted for 38.3 percent of the accretion during April-December 2003. The share of foreign direct investment was 9.5 percent and the share of portfolio investment 28.8 percent. Among other highlights of the report was that non-resident Indian (NRI) deposits accounted for 13.3 percent of the banking capital. Valuation changes, reflecting the appreciation of the euro, pound sterling and yen against the US dollar, accounted for $5.4 billion of accretion to total reserves in April-December 2003 as against a valuation gain of $3.7 billion in April-December 2002. While the Reserve Bank of India denominates its forex reserves in terms of US dollars, these comprise a basket of major international currencies, particularly US dollar, euro and pound sterling. Accordingly, when non-US dollar currencies appreciate in terms of the dollar, there is accretion to reserves by way of valuation gains. The reverse is the case when these currencies depreciate against the dollar. "During the period under review, euro, yen and GBP (pound) had appreciated substantially against the US dollar," the RBI states. This led to a 20 percent, or $5.4 billion, valuation gain in reserves. Other significant changes observed during the April-December 2003 period included the current account surplus, which increased to $3.2 billion in April-December 2003 from $2.9 billion in the same period in 2002. "There has been a significant rise in net inflows through the capital account heads at $17.8 billion during April-December 2003 as against $9.7 billion" in the nine-month period in 2002, the RBI report revealed. The period under study also saw a significant increase in capital flows from investment by foreign institutional investors (FIIs), short-term credit and non-resident deposits.
Source: IANS
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