The Hindu Business Line : Forex reserves surge $700 m on FII inflows

AIDED by significant dollar inflows, the country's forex reserves surged by $700 million for the week ended July 9, 2004, as per the latest RBI statistics.

The forex reserves jumped to $120,778 billion for the week ended July 9, from $120.078 billion in previous week.

"The accretion in forex reserves in the week might be on account of significant foreign institutional investor (FII) inflows during the week and revaluation of currencies," said Mr R. V. S. Sridhar, Vice-President and Head Forex, UTI Bank.

The accretion in the reserves can primarily be attributed to the increase by $667 million in the foreign currency assets coupled with an accrual of $13 million in the reserve position with the International Monetary Fund (IMF).

The foreign currency assets had the quantum of $115.405 billion against $114.718 billion in the preceding week. The reserve position in IMF increased to $1.314 billion up from $1.301 billion.

Outflow of forex on account of oil payment was relatively less during the week, a factor in addition to large supplies, if dollars with an appreciating rupee had led to reserve accretion, said a senior dealer. FIIs had made a net investment of $77.60 million in debt and equity in the country for the week. The rupee had regained about one per cent during the week strengthening against dollar.

Liquidity position in the system continues to be comfortable, said dealers. About 64,000 crore was parked in the repos by banks with the RBI through the week ended July 9. The repo rate is 4.25 per cent for the seven-day repo and 6.00 per cent for the fourteen-day repo.

In the past week rupee had weakened to touch a bottom of 46.27 against the greenback but closed stronger at 45.95 against the dollar.