Forex Reserves to touch $300 bn: IEG

Written by Agencies | New Delhi, December 30: | Updated: Dec 30 2007, 19:07pm hrs
On the back of robust foreign inflow due to sub-prime and other crises in the West, India's foreign exchange reserves are expected to rise by USD 100 billion to touch USD 300 billion mark by the end of current fiscal, the Institute of Economic Growth (IEG) has said.

"We expect such flows to continue especially as foreign funds are now diverted to safe havens such as India, following uncertainty about the extent of impact due to sub-prime crisis and potential recessionary signals emanating from US economy," IEG said in its monthly monitor.

"Forex reserves are to reach USD 300 billion by the end of March 2008," the report projected.

However, for the week ended December 21, forex reserves witnessed a decline of USD 232 million to touch USD 272.72 billion, primarily as a result of drop in foreign currency and assets collections.

As per the weekly statistical supplement of the Reserve Bank (RBI) released on December 28, foreign currency and assets dropped by USD 230 million to USD 263.93 billion.

Since the beginning of the calendar year, forex reserves have bulged more than 55 per cent, second highest after Brazil among the BRIC nations.

Brazil's foreign exchange reserves jumped by 106 per cent to USD 178.8 billion as on December.

Rate cut by the Fed in the US along with the positive perception prevailing about the emerging economies such as India has led to sharp rise in inflows, it said.

In percentage terms, the accretion would amount to a growth of over 50 per cent on year-on-year basis. The country's forex stood at USD 199.1 billion for the year ended 2006-07.