Foreign exchange reserves rise $8 m to $263.7 bn

Written by fe Bureau | Mumbai | Updated: Jun 28 2009, 02:39am hrs
The countrys foreign exchange reserves rose $8 million to $263.7 billion in the week ended June 19, the Reserve Bank of India (RBI) said in its weekly statistical supplement released on Friday.

While foreign currency assets rose $10 million to $252.8 billion, gold reserves remained unchanged at $9.6 billion, the RBI said. Reserves with the International Monetary Fund fell by $2 million to $1.24 billion, while the nations special drawing rights stood unchanged at $1 million. The central bank noted that total foreign exchange reserves of India have dropped $48.8 billion in the past year. Reserves comprise of foreign currencies, gold and special drawing rights with the IMF. According to RBI data, for the week ended June 12, foreign exchange reserves rose $2.4 billion to $263.6 billion.

The rupee on Friday closed down 50 paise since Thursday, at 48.12 against the dollar, compared to 48.60/61 on Thursday. It has declined about 0.1% this week. Rupee rose on expectations of capital inflows being pumped in, on the back of strong equity markets coupled with weakness of the dollar against other currencies. The BSE Sensex was up by 2.9%, or 419 points, on Friday to 14,764 points. According to data from the Securities and Exchange Board of India, overseas investors have bought $4.9 billion more Indian shares than they sold this year, up 79% from the same period last year.

We continue to remain positive on the rupee. There are some concerns that the high fiscal deficit will impact the rupee negatively. These concerns are overdone, due to the available financing for the government. The catalysts for rupee appreciation remain, including stronger domestic demand than elsewhere, prospects of higher capital inflows, in part due to reforms, and a lower current account deficit, said Tushar Poddar, vice-president & chief economist with Goldman Sachs India.