The Hindu Business Line : Forex reserves touch $87.9 b on NRI remittances

THE forex reserves of the country grew by $491 million to touch $87.856 billion for the week ended September 12 on account of NRI remittances and export receivables.

This figure does not reflect the impact of the new measures taken by the Reserve Bank of India earlier in the week to curb the inflow of `hot money'. The RBI lowered the interest rate on NRE deposits on September 15 rendering them rather unattractive and deprived overseas corporate bodies of special facilities on September 16. Therefore, next week's accretion to the reserves will showcase the impact of the RBI's measures.

According to the RBI's latest statistics, the foreign currency assets increased by $490 million to $84.132 billion, gold was steady at $3.720 billion and special drawing rights increased by $1 million to $4 million.

Gradually market participants are changing their view, with the fact sinking in that the forex inflows are bound to decrease in the days to come. However, as far as the domestic currency is concerned the majority view is still that the rupee will appreciate.

"In the long-term service sector exports are expected to rise and the pattern of trade inflows should continue," said Mr P. Mukherjee, Senior Vice-President, Treasury, UTI Bank.

During the week gone by, the rupee lost over 13 paise to end the week at 45.93/94 against the dollar as a result of the RBI's unexpected measures compounded with the nearing of the maturity of the $5.5-billion Resurgent India Bonds on October 1.

With reassurances from the apex bank, the market is calmer and it is expected to be `placid' on the D-day, said the treasury head of a bank.

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