Forex reserves see highest weekly rise in 13 months

India’s foreign exchange reserves went up by $5.1 billion to $253.83 billion during the week-ended March 20, 2009, mainly on account of a revaluation of currencies and an inflow of foreign funds into the equity market.

This is the highest weekly rise in the last 13 months. During the week-ended February 29, 2008, foreign exchange reserves had gone up by $6.62 billion to $301.24 billion. The reserves had hit a peak of $316.17 billion on May 23, but fell by $62.35 billion after that as foreign institutional investors (FIIs) pulled out of the stock markets. In recent weeks, however, there has been some accretion.

In rupee terms, the foreign exchange reserve declined by Rs 10,983 crore to Rs 12,73,257 crore during the week-ended March 20, 2009.

Till now, during the current financial year, the reserves have dropped by $50.89 billion, largely due to revaluation losses. The Reserve Bank of India’s (RBI’s) intervention in the foreign exchange market to check the steep volatility in the value of the rupee has resulted in a net purchase of dollars amounting to $31.76 billion. In recent weeks, however, the RBI has lowered its intervention fearing that it will end up sucking out rupee liquidity if it sells dollars.

According to the latest data released by the central bank, foreign currency assets increased by $5.08 billion to $243.24 billion during the week-ended March 20. This excludes $250 million invested in foreign currency-dominated bonds issued by IIFC Plc.