FX asset returns up 3.9%

The return on the country's foreign exchange reserves improved to 3.9 per cent for July 2005-June 2006 from 3.1 per cent in 2004-05, helped by hardening of short-term interest rates,.

The reserves are invested in multi-currency, multi-asset portfolios as per existing norms, which are similar to international practices, RBI said in its report today. India's investments in securities declined to $ 34.15 billion at end of September 2006 from $ 35.17 billion at the end of March 2006.

As on end-September 2006, of the total foreign currency assets of $158.3 billion, $76.4 billion was deposited with other central banks, BIS and IMF and $47.7 billion was in the form of deposits with foreign commercial banks.

On the adequacy of the reserves, RBI said the ratio of short-term debt to reserves increased slightly to 6.4 per cent as on end-September 2006 from 5.7 per cent as on end-March 2006.

The ratio of volatile capital flows (defined to include cumulative portfolio inflows and short-term debt) to reserves declined from 43.4 per cent (end-March 2006) to 42.0 per cent by end of first half of financial year ending September 2006.