Barclays sees forex reserves scaling past USD 380 bn this year

British brokerage Barclays has said it sees the Reserve Bank continuing to shore up the forex reserves, which have been hitting new highs for many months, to the tune of USD 50 billion to take the overall kitty to over USD 380 billion by December.
For the week ended February 26, forex reserves had increased to USD 328.12 billion, the highest ever, according to the RBI data, which also showed that it had net bought USD 12.2 billion from markets in January alone.
Stating that RBI has a decent headroom to build more forex reserves which are currently at life-time high of USD over 328 billion, Barclays India chief economist Siddhartha Sanyal said RBI could mop up another USD 50 billion this year.

"Considering that CAD is likely to be near flat next fiscal at around 0.1 percent, all the capital inflows can potentially be mopped up by RBI. So, on a very conservative basis, the RBI can mop up around USD 50 billion for the reserves, taking the present reserves to the north of USD380 billion in about a year's time," Sanyal told reporters here.
Earlier this week, the central bank had said it scooped up USD16.4 billion in reserve as of December end, taking the overall reserves to USD320 billion. Since then it has been on a continuous rise.
"The foreign exchange reserves in nominal terms, which includes the valuation effects, increased by USD 16.4 billion during the April-December period of FY15 compared to USD 1.8 billion during the same period of preceding year," according to the RBI data. This was despite a valuation loss of USD 14.8 billion in the period as against a loss of USD 6.6 billion in the year-ago period, due to the appreciation of the US dollar against major currencies along with the decline in gold prices.

The Reserve Bank has also said it was net buyer of a record USD 12.137 billion in January from the spot market, against a net selling of USD 1.929 billion a year ago, to contain rupee volatility and to increase forex reserves. During the month, the apex bank bought USD 15.259 billion from the market and sold USD 3.122 billion.
In December 2014, RBI had net bought USD 6.739 billion after it bought USD 17.908 billion and sold USD 11.169 billion. In the entire FY14, RBI net purchased USD 8.992 Billion--bought USD 52.394 billion and sold USD 43.402 billion.