Comfortable forex front

By Our Special Correspondent

MUMBAI, AUG. 28. The Reserve Bank of India today stated that the external sector recorded a distinct improvement in 2000-01.

``There was an accretion to the foreign exchange reserves of the order of $4.2 billion with the level of the reserves crossing $42 billion by end-March 2001, equivalent of around 9 months import,'' the RBI stated in its Annual Report 2000-01. The current account deficit (CAD) narrowed over the year, reflecting robust merchandise export performance and subdued import demand.

Another noteworthy aspect was the decline in the external debt in terms of its ratio to GDP and also in terms of the ratio of short term debt to the level of foreign exchange reserves. RBI stated, ``the pressure on the balance of payments (BoP) in the first half of 2000-01 on account of the hardening of international oil prices, the massive downturn in international equity prices and successive increases in interest rates in the U.S. economy and Europe eased with the mobilisation of India Millennium Deposits (IMDs) which brought about a turnaround in the BoP in the second half of the year.''

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