Mumbai: If the present pace of dollar accretion to the forex kitty continues, which crossed past the $393 billion, the reserves may hit the $400-billion mark by the week to September 8, 2017, says a report.
Forex reserves have been rising with a total accretion of $4.389 billion to the kitty since July 14, 2017. It had touched a record high of $393.448 billion after it rose by $581.1 million in the week to August 4, 2017.
“If the pace of foreign exchange reserves is similar to that of the past four weeks, the reserves would hit $400 billion by the week to September 8. Indeed, adjusted for forward positions, forex reserves are already at $407 billion,” Morgan Stanley said on Thursday.
The pace of forex accretion has been the strongest since 2015 and this has also been one of the strongest in Asia ex-Japan in the past 12 months, the report said.
The surge in the reserves is on account of high inflows from overseas investors. On a 12-month trailing sum basis, foreign direct and institutional flows remained robust at $63 billion and $17 billion.
This inflow of capital coupled with weak credit off take (credit growth was 6.2 per cent as of July 21) has meant interbank liquidity remains in strong surplus mode of $42 billion, the report said.
