Rbi Raises $600m From Open Market Operations

Bankers expect the reserves to rise further when $370 million of State Bank of India GDR money flows into the country.

As a result of the latest increase, the RBIs total foreign exchange reserves have crossed the $23 billion mark, the highest in the current financial year.

The last time forex reserves crossed $23 billion was on October 20, 1995, when they stood at $23.22 billion.

According to bankers, the Reserve Bank is building up its forex reserves for capital repayments to the International Monetery Fund (IMF) and for redemption of India Development Bonds and FCNR (A) deposits.

$2.2 billion of India Development Bonds must be redeemed.

Part of the amount has, however, already been redeemed in rupees. Apart from this, $3.5 billion of FCNR (A) deposits, which will mature in the next quarter of the current financial year, will also have to be redeemed.

The India Development Bonds come up for redemption in January 1997 while the FCNR (A) deposits have to be redeemed in tranches during this quarter, a banker said.

Besides, some IMF debt also has to be repaid before the end of the year.

Treasury heads feel that about 60 per cent of the FCNR (A) funds will be converted into FCNR (B) deposits.

The RBI is phasing out FCNR (A) deposits as the exchange risk has to be borne by the central bank itself.

RBI governor C Rangarajan observed in the credit policy that without loss of foreign currency assets, it is possible to meet all repayment obligations during the year.

Foreign currency assets rose to $18.47 billion on October 11 from $18.14 billion on September 13. Forex dealers said the RBI has been in the market buying dollars at Rs 35.65/69 for the past one month.

Analysts and bankers agreed that with RBI forex reserves reaching peak levels, it will be possible to meet all external obligations arising- #include virtual="/incs/bottom.inc"-->