Fca Rises By $659 Million, Sdrs Climb

The foreign currency assets (FCA) of Reserve Bank of India (RBI) increased by $659 million during the week ended January 29. There was also a rise in the stock of Special Drawing Rights (SDRs) to the tune of $58 million. The value of gold stock stood unchanged.

As on January 29, the RBIs forex reserves stood at $27,835 million; composed of $24,459 million of FCA, $3,313 million of gold and $63 million of SDRs.

The increase in the FCAs has been primarily because of aggressive buy-sell swaps transacted by RBI in the last couple of weeks in January to ease the liquidity position in the market.

 

These transactions affect the outstanding commitments of RBI in the forward market. The numbers relating to RBIs position in the forward market is available only with a months lag.

While the FCAs of RBI are $24,459 million, the outstanding net forward sales by the Reserve Bank of India at the end of December 1997 was $1,956 million.

The current situation wherein the RBI has turned a net seller presents a contrast from the earlier one in July, when it had been a net buyer of dollars to the tune of $40 million.

It is interesting to note that subsequent to RBI intervention in the second half of 1995-96, the outstanding net forward sales was $2,007 million in April 1996.

The forex reserves of RBI have increased by $1,412 million in the current fiscal; FCA by $2,092 million, SDRs by $61 million while the value of stock of gold held has decreased by $741 million because of decrease in the price of gold.

The provisional figures released by RBI on the 36 country indices (1985=100) of Real Effective Exchange Rate (REER) and Nominal Effective Exchange Rate (NEER) present the following picture.

The export based weighted REER was 64.70 in September 1997 as against 64.98 in August and 63.03 in March, while the NEER was 39.51, 40.03 and 39.18 in the corresponding periods.

The trade-based weighted REER was 67.98 in September, 68.25 in August and 65.87 in March. The corresponding figures in case of NEER were 40.61, 41.13 and 40.09 respectively.

Among the monetary aggregates, the year on year (YOY) growth in money supply (M3) touched 16.6 per cent on January 16. At a disaggregated level (according to sources), the YOY increase in net bank credit to government was 11.2 per cent, the growth in bank credit to commercial sector was 12.4 per cent and the growth in net forex assets of the banking sector was 23.8 per cent.

During the week ended January 23, reserve money grew by 2.1 per cent and the YOY growth in reserve money was 12.1 per cent.