Mumbai, Dec 19 (IANS) Currency valuations, coupled with buying by central bank in the spot trading market, resulted in India’s foreign exchange reserves (Forex) coffers gaining $407.9 million in the week ending December 11, experts said on Saturday.
According to the Reserve Bank of India’s (RBI) weekly statistical supplement, the Forex reserves stood at $352.50 billion for the week ended December 11.
For the previous week ended December 4, the country’s foreign reserves had risen by $483.2 million at $352.09 billion.
Anindya Banerjee, associate vice president for currency derivatives with Kotak Securities, said currency valuations and the central bank’s transactions might have led to the gains in the Forex reserves.
“The gains seem to have occurred on account of currency valuations,” Banerjee told IANS.
The currency valuations strengthened the foreign currency assets (FCAs) which constitutes the largest component of India’s Forex reserves. The FCA gained by $387.7 million at $329.63 billion in the week under review.
Apart from the US dollar, the FCAs constitutes nearly 20-25 percent of other major global currencies, securities and bonds.
The individual movements of these currencies against the US dollar impacts the overall foreign reserves’ value.
In addition, bond buying programme initiated by the RBI in the spot trading markets and low crude oil prices which reduced dollar demand by oil marketing companies (OMCs) were cited as other reasons for the rise in Forex reserves.
“Even the RBI’s transaction in the spot trading markets where it had initiated a bond buying program might have led to the gains,” Banerjee added.
Notwithstanding the rise in overall Forex value, the country’s gold reserves remained stagnant at $17.54 billion.
Gold reserves had plunged by $1.14 billion at $17.54 billion during the week ended December 4, as international prices crashed to a six-year low.
However, the special drawing rights (SDRs) were higher by $15.3 million at $4.02 billion.
Similarly, the country’s reserve position with the International Monetary Fund (IMF) rose. It gained by $4.9 million to $1.30 billion.