Forex to touch $300 bn by March 08: IEG

New Delhi, Dec 30 | Updated: Dec 31 2007, 04:52am hrs
On the back of robust foreign inflow due to sub-prime and other crisis in the West, India's foreign exchange reserves are expected to rise by $100 billion to touch $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 $300 billion by the end of March 2008," the report projected. However, for the week ended December 21, forex reserves witnessed a decline of $232 million to touch $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 of India released on December 28, foreign currency and assets dropped by $230 million to $263.93 billion.

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

Brazil's foreign exchange reserves jumped by 106% to $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% on year-on-year basis. The country's forex stood at $199.1 billion for the year ended 2006-00.

PTI