Forex reserves up $4.24 bn, highest in six weeks

India’s foreign exchange reserves went up by $4.24 billion to $255.94 billion during the week ended May 15, 2009, mainly due to revaluation of currencies.

Foreign currency assets increased on account of the appreciation of euro, sterling and yen against the US dollar held in the reserve. This is the highest rise in the financial year and highest since March 27, 2009.

According to the latest data by the Reserve Bank of India (RBI), foreign currency assets went up $4.04 billion to $245.50 billion during the week. Gold and special drawing rights remained unchanged in the reserve. Reserve position in the International Monetary Fund increased $225 million to $1.21 billion at the end of May 15, 2009.

In rupee terms, the reserves declined by Rs 2,645 crore to Rs 12,61,403 crore, indicating the significance of dollar depreciation during the week.

On the back of strong FII inflows, the rupee strengthened from 49.91 levels on May 4 to 49.29 levels on May 8. As economic indicators showed signs of revival in the west, foreign institutional investors bought equities worth $906.50 million on the bourses during the five-day period ended May 8.

“Currency participation is helping forex reserves but the accretion is not much. With economic indicators showing signs of recovery in the west, FII inflow may not be a concern and the reserve will go up in the coming days,” said a dealer with a public sector bank.