India's Forex Reserves Jumped $ 6.118 Billion To $ 682.354 On FCNR Deposit Flows

Mumbai: India's forex reserves jumped $ 6.118 billion to $ 682.354 billion during the week ended July 24. In the previous reporting week, the overall reserves had increased $ 1.08 billion to $ 676.237 billion.

According to RBI data released this week, banks have mobilised about $32 billion under its forex measures.

The increase in reserves could be attributed to the special foreign currency deposit and borrowing schemes announced by the central bank in June.

The growth in forex reserves during the week was largely led by a sharp increase in foreign currency assets (FCAs), a major component of the country’s forex reserves which rose by $4.87 billion to $555.93 billion during the reporting week.

Expressed in dollar terms, the foreign currency assets include effects of appreciation or depreciation of non-US units, such as the euro, pound, and yen, held in foreign exchange reserves.

The central bank and the government had launched a series of measures to attract more forex flows into the country last month, including the FCNR(B) measure. The value of gold reserves increased $ 1.308 billion to $ 103.058 billion during the week, the RBI said.

According to Reuters, the RBI’s net foreign exchange forward book market shrank slightly to $103.3 billion in June, as a reduction of near-tenor dollar liabilities outweighed a rise in longer tenor ones likely reflecting absorption of dollar inflows. The RBI’s short-dollar forward book shrank $3.3 billion month-over-month by the end of June, driven by a nearly $13 billion reduction in forward dollar sales of up to three month maturities.

The fall in near-tenor liabilities was offset by an over $6 billion dollar rise in liabilities beyond one year, which would reflect flows absorbed under discounted dollar-rupee buy/sell swap facilities introduced to encourage banks to mobilise foreign-currency deposits and overseas borrowings by lenders and state-run firms.

The kitty had expanded to an all-time high of $ 728.494 billion during the week ended February 27 this year before the onset of the Middle East conflict which led to several weeks of a drop as the rupee came under pressure and the RBI had to intervene in the forex market through dollar sales.