Date:04/02/2006 URL: http://www.thehindubusinessline.com/2006/02/04/stories/2006020403370600.htm

Back Forex reserves up $37 m on inflows into equity market

Our Bureau

Mumbai , Feb. 3

THE foreign exchange reserves of the country gained by $37 million for the week ended January 27 on the back of inflows into the domestic equity market.

According to the Reserve Bank of India's Weekly Statistical Supplement, foreign exchange reserves touched $139.481 billion for the week ended January 27, up from $139.444 billion in the previous week.

The forex reserves had fallen by $66 million in the previous week.

The foreign currency assets, which rose by $35 million to touch $133.281 billion, mainly contributed to the rise.

Foreign currency assets expressed in dollar terms include the effect of appreciation or depreciation of non-US currencies such as the euro, sterling and yen.

Gold and SDR remained unchanged at $5.274 billion and $5 million respectively.

The reserve position in the IMF, however, increased by $2 million to touch $921 million.

According to the treasury head at a private bank, the foreign institutional investor inflows into the market might have contributed to the accretion in the forex reserves.

The net inflows into the domestic equity market were $270 million during that particular week, according to data from SEBI.

In terms of the outlook for the rupee, the treasury head said the rupee could be in the range of 44.10-44.30.

"The central bank may buy dollars to infuse liquidity in the system and cause the rupee to depreciate. However, the rupee might appreciate on the back of heavy inflows coming into the market," said the treasury head.

Dealers said if the rupee were to strengthen to 44.10, importers might start purchasing dollars.