After rising over $6 billion for the week ended May 22, country?s foreign exchange reserves rose by $1.67 billion to $262.3 billion, for the week ended May 29.
Even though dollar inflow has continued as FIIS have kept their invesment momentum in stock market, the forex rise has not happened to that extent during the week as there has been suspected intervention by the Reserve Bank of India (RBI) in the forex market, in a bid to prevent rupee from appreciating sharply. The rupee after surging past 47 has hovered around over 47 during the week.
The weekly statistical supplement released by the RBI on Friday showed that foreign-currency assets increased $1.29 billion to $251.5 billion, while the country?s gold reserves increased $373 million to $9.6 billion.
India?s special drawing rights with the International Monetary Fund were unchanged at $1 million, while its reserves with the IMF rose $3 million to $1.25 billion.
The country?s foreign exchange reserves declined $52.3 billion since last year, RBI said.
With heavy capital inflows pouring in, the rupee strengthened heavily against the dollar, on Monday, breaching the 47-mark, which was then suspected to have been followed by intervention from the RBI to control the rupee from further appreciation to protect exporters from getting hit.
?The rupee?s short-term outlook is positive as the stock market?s strength may attract more overseas capital,? said RVS Sridhar, senior vice-president at Axis Bank. ?The president?s word on further reforms will encourage investors.?
The index has surged 56% this quarter, heading for the biggest gain in such a period since 1992.
The rupee is set to rally 10% to 43 per dollar by mid-2010 as inflows from abroad pick up and lower oil prices improve the trade balance, Calyon said.