The Hindu Business Line : Forex reserves down at $6.5 b in April-June

SHORT-term credit accounts for over 24 per cent of accretion to the foreign exchange reserves of the country in the April to June quarter of 2004. This source of reserve accretion, for the period stood at $1.6 billion, the RBI said today in a release.

The figure in the same period in the previous year was $0.9 billion, said the release.

The country's forex reserves for the quarter stood at $6.5 billion, lower than $7.1 billion in the same period for 2003-04.

Foreign investment to the tune of $1.3 billion formed a whopping 20 per cent of the increase in reserves. Of this, foreign direct investment (FDI) comprised 18.5 per cent and portfolio investment formed 1.5 per cent.

Banking capital, including non-resident Indian (NRI) deposits, contributed 16.9 per cent to the reserves as it stood at $1.1 billion, lower than the previous corresponding figure of $1.9 billion.

NRI deposits reduced by $0.8 billion, against an accretion of $1.8 billion in the previous period.

Valuation changes, contributed to a decline of $1.0 billion in the reserves, against a valuation gain to the tune of $1.6 billion in the same period of previous year.

According to the Reserve Bank of India, valuation changes reflect depreciation of major currencies such as, euro, GBP and yen against the US dollar.

Current account showed a surplus aggregating $1.9 billion during April-June 2004, against a deficit of $0.6 billion in the same period previous year.

Capital account amounted to $5.6 billion ($6.1 billion).External assistance worth $72 million was received, while other items comprising difference between Customs data on imports or exports and banking channel data amounted to $2.4 billion. Rupee debt service showed a negative balance of $277 million. Together these transactions accounted formed 4.6 per cent of the change in reserves.