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Continuing the trend of offloading dollars in the market, the Reserve Bank of India remained a net seller of the US currency in February. It was a net seller in January, too.
The scale of activity was much smaller in February than the earlier month. RBI sold US greenbacks worth $530 million in February as against $1.92 billion in January. It did not buy dollars from the market; in January, however, it did so for $375 million, according to RBI data.
The central bank was a net buyer in October-December 2013, too, as banks received huge dollar flows into their Foreign Currency Non-Resident (Banks) Deposit, backed by RBI’s offer to swap dollars.
Under this swap window, banks could swap fresh FCNR(B) dollar funds (deposits with a maturity period of at least three years) at a fixed rate of 3.5 per cent a year.
The swap window was open till November 30, 2013. RBI also offered banks to swap their overseas borrowings. The two swap windows have mobilized a sum of $ 34 billion.
In December 2013 the Central bank purchased net $3.48 billion, down from $10.08 billion in November. It had mopped up $3.9 billion in October.
Its outstanding net forward sales in February 2014 stood at $31.31 billion, down from $31.84 billion at end of January.
Meanwhile, as for money flowing into NRI deposits, the pace moderated further in further February 2014. The net flows stood to $401 million in reporting month from $510 million in January 2014. The outstanding NRI deposits rose in February 2014 to $99.83 billion from $99.43 billion in January 2014.
Forex reserves rise
RBI says our foreign exchange reserves rose by $2.97 billion to $306.64 billion in the week ended April 4. Foreign currency assets were up $2.39 billion to $278.8 billion and the value of gold assets rose by $588 million to $21.56 billion, according to Reserve Bank of India data.
