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Forex reserves rise on valuation gains
The country`s foreign exchange reserves were slightly higher on September 28 than a week ago, reflecting the gains of the sterling and the euro against the dollar, analysts said in Mumbai.
The country's foreign exchange reserves were slightly higher on September 28 than a week ago, reflecting the gains of the sterling and the euro against the dollar, analysts said in Mumbai.
The Reserve Bank of India (RBI), on Saturday said that forex reserves rose $65 million to $44.769 billion on September 28 from a week earlier.
"The rise could have been due to mark-to-market adjustments of currencies like the sterling and euro," said V Ravikumar, Bangalore-based treasury head at private sector Vysya Bank. "Therefore, reserves have increased despite dollar flows having trickled down," he added. India's foreign currency assets, which are expressed in dollar terms, include the effect of appreciation or depreciation of currencies other than the dollar, such as the euro, sterling and yen, held in reserves.
The RBI, however, does not disclose the exact composition of the foreign currency assets but analysts say the valuation gains of the non-dollar currencies, which are estimated at 15 per cent of the total, were substantial.
"A fair amount of reserves are still held in sterling which appreciated by about 1.4 cents in that week," said Ravikumar. Forex reserves have been hitting historic highs this year, driven by record foreign portfolio investments in domestic markets.
But offshore funds turned net sellers for the first time in 2001 when they sold a net $76.8 million in Indian assets in September. They have pumped in $2.58 billion in the year to date, against $1.56 billion in calendar 2000.
The demand for dollars from foreign funds in September was part of the reason why the rupee weakened to all time lows last month, analysts said.
Bureau Report
"The rise could have been due to mark-to-market adjustments of currencies like the sterling and euro," said V Ravikumar, Bangalore-based treasury head at private sector Vysya Bank. "Therefore, reserves have increased despite dollar flows having trickled down," he added. India's foreign currency assets, which are expressed in dollar terms, include the effect of appreciation or depreciation of currencies other than the dollar, such as the euro, sterling and yen, held in reserves.
The RBI, however, does not disclose the exact composition of the foreign currency assets but analysts say the valuation gains of the non-dollar currencies, which are estimated at 15 per cent of the total, were substantial.
"A fair amount of reserves are still held in sterling which appreciated by about 1.4 cents in that week," said Ravikumar. Forex reserves have been hitting historic highs this year, driven by record foreign portfolio investments in domestic markets.
But offshore funds turned net sellers for the first time in 2001 when they sold a net $76.8 million in Indian assets in September. They have pumped in $2.58 billion in the year to date, against $1.56 billion in calendar 2000.
The demand for dollars from foreign funds in September was part of the reason why the rupee weakened to all time lows last month, analysts said.
Bureau Report