India's forex reserves reach new levels of $73.20 B
Monday, 03 February 2003, 20:30 IST
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NEW DELHI: India's foreign exchange reserves ballooned to $73.20 billion with inflows of $8.05 billion during the week ending January 24, according to data released Saturday. The inflows include the effect of appreciation or depreciation of non-U.S. currencies like the Euro, Sterling and Yen, the Reserve Bank of India (RBI) stated in its weekly statistical data. While gold reserves at $3.44 billion and the special drawing rights (SDR) at $ 7 million have remained at the same level as in the previous week, foreign currency assets have risen from $68.94 billion to $69.75 billion during the course of the week, the RBI said. According to a study done by the RBI's Department of Economic Analysis and Policy (DEAP) on foreign exchange reserves, enhanced current account surplus and capital inflows and not an increase in remittances by non-resident Indians (NRI) as compared to 2001 that has resulted in the healthy state of forex reserves. During the current fiscal from April 1, 2002 to January 17, 2003, India's forex reserves have increased from $54.1 billion to $72.4 billion - a rise of $18.3 billion. The study has found an increase in capital inflows via export receipts due to an appreciation of the rupee. It has substantiated this by pointing out that the rise in exports this fiscal is not commensurate with the inflows. "Export receipts which may have been withheld earlier due to expectation of further depreciation of the rupee are also being realised faster as the rupee has appreciated," the study stated. Valuation changes reflecting the appreciation of the Euro, Sterling and Yen against the U.S. dollar account for $2.1 billion in the value of forex reserves, the study said. NRI remittances at $2.1 billion during April-November 2002 remained close to the corresponding level in 2001 of $2.2 billion due to the attractive interest rates offered in India, which is higher than that overseas, despite some lowering of rates. "There exists an interest rate differential of three to four percent between the rates abroad and in India, given the lower interest rates abroad. There has been a net increase of $2.1 billion in NRI deposits during the period April-November 2002, similar to the increase of US$ 2.2 billion in April-November 2001," the study noted. "In other words, the inflows through NRI deposits in the current fiscal have been consistent with the trends observed over the past few years." An analysis of the sources of reserves indicates that a substantial portion of the fresh accretion has been by current account surplus (20 percent), non-debt creating capital flows (40 percent) and by currency valuation (17 percent). The balance (23 percent) that has come by way of debt creating capital inflows includes non-resident deposits, "other assets" under banking capital and short term loans, the report stated. In addition, the net earnings of the foreign exchange reserves has been 4.1 percent, exclusive of the substantial gains accrued in dollar terms to foreign exchange reserves portfolio on account of appreciation of non-dollar currencies against the U.S. dollar and gains from the rise in price of gold during the year.
Source: IANS
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