Mumbai, Nov 21 (IANS) The central bank’s attempts to curb volatility in rupee value and to maintain its competitiveness helped India’s foreign exchange (Forex) kitty to gain 780.9 million, experts said on Saturday.
Overall, the Forex reserves stood at $352.51 billion for the week ended November 13.
“The gains can be attributed to the fact that Reserve Bank of India (RBI) bought US dollars to maintain rupee’s competitiveness and to build-up reserves,” Anindya Banerjee, associate vice president for currency derivatives with Kotak Securities, told IANS.
“Initially, the RBI had to even sell US dollars to support the rupee value, which had come under strain, after Bihar polls outcome and the flight of foreign funds from India on account of heightened chances of a US rate hike.”
According to Banerjee, the RBI is comfortable with the rupee ranging anywhere between 65.50-67 to a US dollar. Anything beyond or below that limit provokes the central bank to intervene by either buying or selling the greenback.
India’s Forex kitty had dwindled by $1.90 billion to $351.73 billion for the week ended November 6.
The rupee had been on a downward trajectory during the week under review.
On a weekly basis, the rupee had weakened by 34 paise to 66.10 to a US dollar (November 13) from its previous close of 65.76 to a greenback (November 6).
The rupee was dented due to heavy outflows of foreign funds during the week ended November 13.
The foreign fund outflow was aggravated by the central governments’ setback in the Bihar polls and heightened chances of a US rate hike.
The National Securities Depository Limited (NSDL) data showed that the FPIs (Foreign Portfolio Investors) bought Rs.1,536.8 crore or $233.23 million mainly in the debt markets from November 9-13.
The data with stock exchanges showed that the FPIs sold stocks worth Rs.2,281.64 crore in the period under review.
In addition, the RBI’s weekly statistical supplement revealed that the foreign currency assets (FCAs) gained by $793.5 million to $328.52 billion in the week under review.
“The FCA expressed in US dollar terms, include the effect of appreciation or depreciation of non-US currencies such as the pound sterling, euro and yen held in reserve,” the RBI was quoted as saying in its statistical supplement.
The FCA constitutes the largest component of India’s Forex reserves. It consists of US dollars, major non-dollar currencies, securities and bonds.
The country’s gold reserves remained stagnant during the week under review at $18.69 billion. The gold reserves had risen by $540 million during the week ended November 6.
However, the special drawing rights (SDRs) were lower by $9.5 million at $3.99 billion.
Furthermore, the country’s reserve position with the International Monetary Fund (IMF) weakened by $3.1 million to $1.29 billion.