Forex reserves up $.1.31 bn

Written by fe Bureau | Mumbai | Updated: Oct 18 2014, 06:29am hrs
Foreign exchange reserves rose by $.1.31 billion in the week ended October 10 to $312.74 billion, the Reserve Bank of India data showed.

Forex reserves rose by $33.5 billion y-o-y on account of healthy dollar inflows into local bond and equity markets through foreign portfolio investors and also strategic dollar purchases by the RBI from the forex market intermittently.

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RBI bought dollars at regular levels to curb volatility in the rupee amid strong dollar inflows. Foreign investors have poured in $21.33 billion since January into Indian bonds and another $13.2 billion into equity. However, the rupee has strengthened just 0.6%, indicating the RBI prefers to thwart not just a sharp fall but also a strong appreciation of the currency.

RBI has bought $10.6 billion from the domestic foreign exchange market in July through both spot and forward transactions. In August, RBI sold a small $511 million in the spot market.

Recently, the RBI governor had said that most emerging markets will buy dollars and build reserves to insure against a possible outflow as the US Fed readies to tighten its policy.

Forex reserves fell in 2013 after foreign investors pulled out $12 billion from the market in May-December. The outflow dragged the rupee to a lifetime low of 68.25 in August 2013. RBI announced a slew of measures to attract inflows and stem the rupee's fall. Reserves have been rising since then.