India's forex reserves up $3.2 billion as dollar sinks
26 Jun 2010
The value of India's foreign exchange reserves rose by $3.2 billion during the week ended 18 June. Foreign exchange reserves stood at $275.969 billion, up from $272.783 billion as of 11 June.
At the same time, foreign currency assets with the Reserve Bank increased to $250.370 billion from $247.241 billion last week. The nation's reserve position with the International Monetary Fund amounted to $1.310 billion, larger than the $1.298 billion reported in the preceding week. Gold reserves remained unchanged at $19.423 billion, data released by the Reserve Bank of India on Friday showed.
The rise in reserves was attributed largely on account of the dollar weakening against major currencies during the week, which resulted in revaluation of non-dollar assets in the reserves. Besides, foreign investors also brought additional funds into Indian stocks and bonds during the week.
"The bulk of the reserves pile-up for a long time now has been due to revaluation of non-dollar assets this year. The Reserve Bank of India has not intervened - neither buying nor selling dollars - and has let the local currency find its own levels," The Economic Times quoted an unnamed economist with a local broking as saying.
The government did not borrow any amount from RBI during the week ended 18 June on account of improved revenue position. Instead, it parked surplus revenues of over Rs5,000 crore with the central bank. "This is largely on account of revenues from the licence fee on the third generation (3G) mobile telephony and other spectrum," said a bond market official, requesting anonymity.
State governments resorted to fresh borrowings worth about Rs35 crore during the week. These short-term borrowings are known as ways and means advances, or WMA, a facility under which governments borrow from the central bank to meet their daily revenue mismatches.
While borrowings within the limit is at the prevailing repo rate, anything above the limit is at 2-percentage points higher than the repo rate.