India's foreign exchange reserves rose for the 23rd straight week, hitting a new high and confirming market belief that the Reserve Bank of India (RBI) continued to mop up dollars from the market. Foreign exchange reserves touched $50.744 billion in the week ended March 1, a rise of $8.8 billion in the past 12 months.
The central bank has been following a policy of absorbing some of the heavy foreign investment the country has received in recent years, gradually boosting reserves.
Analysts said the RBI's heavy intervention in the past two to three months may be driven by twin objectives of depreciating the rupee and preparing for a heavy bond redemption in 2003.
"The RBI's policy of building reserves will continue and I expect to see reserves touch $75 billion by March 2003," said an economist with a foreign research house in Mumbai. "This increase should help meet repayments of the RIBs (Resurgent India Bonds) as well as please the strong exporter lobby, which wanted a slightly weaker rupee," the economist said.
The rupee ended Friday at 48.7400/7450 and is down one per cent since the start of 2002.
Analysts expect there will be a drain on reserves next year, when the RIB that raised $4.2 billion in deposits from expatriates in 1998, after the country was punished with economic sanctions for its nuclear tests, is redeemed. But the portfolio flows have just started, totalling $715 million so far in 2002 against the $2.8 billion received in 2001. Bureau Report