India's forex reserves at $120-B high

Monday, 19 July 2004, 07:00 Hrs
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NEW DELHI: India's foreign exchange reserves increased by $700 million over the week ended July 9 to cross a record $120 billion, the central bank weekly statistical data released Saturday revealed.

From $120.08 billion in the previous week, India's forex reserves reached $120.78 billion at the close of the week with continuing inflow of $700 million, according to Reserve Bank of India data.

Of the total reserves, the foreign currency assets witnessed the largest surge with an inflow of $687 million to reach $115.41 billion, while gold assets remained static at $40.57 million.

The rise in foreign currency assets is due to the "effect of appreciation/depreciation of non-US currencies (like Euro, Sterling, Yen) held in reserves," the RBI stated.

In the case of the special drawing rights (SDR) assets in the International Monetary Fund (IMF), there was a drop by $2 million, but the reserve position in the international body rose by $13 million to $1.31 billion, data showed.

The rise in the reserve position was due to the inclusion of the Reserve Tranche Position (RTP) from the week April 2, 2004, in keeping with the international best practice, the RBI explained.

Earlier the RTP was being listed separately for a whole year from May 23, 2003 to March 26, 2004.

With India proposing to tax interest earnings on fixed deposits of non-resident Indians (NRIs), experts feel there could be a slowdown in the inflow of remittances from overseas.

Among the new tax proposals in the central budget for 2004-05, Finance Minister P. Chidambaram said the interest free provision was being removed as it had outlived its utility in view of the healthy forex reserves.

Source: IANS
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