Forex Data Shows April Turnover At $84.3bn
Turnover in the foreign exchange market for April 1997 stood at $13 billion for the merchant segment and $71.3 billion for the inter-bank segment as per the latest data received from the Reserve Bank of India (RBI).
The excess in inter-bank transactions over merchant transactions indicate the extent of trading for the purpose of booking profits by banks.
Comparison of the data for April with that of the first three months in 1997 indicate that activity in the forex market has reached a level of near-normalcy following the peak activity observed in March when the market was faced with a huge dollar glut in both the spot and forward segments. The figures for April are lower than March but only marginally higher than the figures for January and February
Total merchant purchases by banks from their clients in April 1997 were $4.124 billion as compared to $5.145 billion in March. Total sales amounted to $3.944 billion in April which was lower than the March figures of $4.250 billion.
As observed during the first three months of 1997, in April too, the dollar purchases by banks from the merchant sector have exceeded sales. This is reflective of the persistent oversupply of foreign currency the Indian forex market has witnessed during the recent past on account of slow import growth.
Banks' purchases of forward dollars from exporters dipped to $1.406 billion from $1.879 billion in March when receiving pressure was at its peak. However, cancellation of forward contracts were higher at $285 million as compared to $227 million in March.
Sale of forward contracts by banks to the merchant sector in April was substantially higher at $1.256 billion as compared to $855 million in March. This could indicate that importers have begun to come into the market to book the forward dollar.
The day-wise break up of figures show that maximum merchant activity in the forward segment were on April 17 and 21 with total purchases amounting to $284 million and total sales amounting to $151 million following the announcement of the credit policy, and the sudden crashing of the forward premiums by 100 basis points to 4.7 per cent.
In the inter-bank segment also, the volume of transactions were lower in April as compared to March . Total inter-bank sales at $6.706 billion were lower than inter-bank purchases at $6.904 billion. One of the important reasons for this is the limited dollar mop-up activity of the RBI last month, and good inflows from the merchant sector.
Inter-bank swapping activity was also lower with purchases at $12.811 billion and sales at $11.735 billion as compared to $13.599 billion and $13.180 billion respectively in March largely on account of less arbitraging.
The above data is obtained by the RBI from 90 to 95 banks, and is compiled on a daily basis. While all banks in the system are not necessarily included, the data is representative of the entire banking system. Merchant transactions represent transactions between the banks and its customers. Inter-bank transactions reflect banks' transactions with one another, transactions with overseas banks as well as sales to and purchases from the RBI.