Mumbai
- After a gap of four years, India's foreign exchange reserves touched a new
lifetime high at $322.135 billion for the week ended January 16, driven by
higher inflows and lower outgo of forex on account of a big slump in global
crude prices.
The reserves jumped by $2.66 billion to
reach $322.135 billion during the week, the Reserve Bank data showed yesterday.
The forex kitty for the first time had
crossed $320 -billion mark ($320.79 billion) for the week ended 2 September
2011.
"Strong FII inflows and reduction in import burden due
to a record fall in oil prices have led to accumulation of the reserves,"
Harihar Krishnamoorthy, Treasury Head at FirstRand Bank, told PTI.
Overseas investors have pumped in $3,442.29 million into
Indian market markets in this month so far, according to the data given by
Central Depository Services.
"Dollar selling from exporters in the market has
contributed towards higher forex reserves," said a chief dealer with a
state-owned bank.
Analysts also attributed the rise in the reserves to the
likely buying of dollars by the RBI.
The RBI has been net purchaser of dollars for the most part
of the current fiscal. Last November, the apex bank net purchased $3,081
million worth of the greenback from the spot market while in October the figure
stood at $2,703 million.
The foreign currency assets (FCAs), a major constituent of
overall reserves, jumped $2.685 billion to $297.53 billion in the reporting
week, the data showed.
FCAs, expressed in dollar terms, include the effect of
appreciation and depreciation of non-US currencies such as the euro, pound and
yen, held in reserves.
Foreign brokerage Bank of America-Merrill Lynch said in a
report today that it expects the forex reserves to reach 10 months' import
cover by March 2016, which currently is at
about eight months.
Ever since the Narendra Modi government came to
power in May-end, foreign funds had been pumping more and more dollars into
Indian equities.
In 2014, FIIs pumped in $16.15 billion into Indian equities
while they have exhausted the cap of $30 billion in Government Securities. They
have parked $32.5 billion in corporate bonds, which is 64 percent of their cap
of $51 billion.
The Bank of America-Merrill Lynch said the European Central
Bank's massive bond stimulus programme announced yesterday could further boost
foreign flows into emerging markets like India this year, thus offsetting the
possible outflow on account of the US tapering.
The American brokerage has estimated India could attract $25
billion in portfolio equity flows from the ECB action.
On the rupee side, the rising forex reserves had the Indian
unit becoming the best performing Asian currency throughout last year.
So far this year, the domestic currency has gained around
2.6 percent against the US dollar.
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