Date:06/05/2006 URL: http://www.thehindubusinessline.com/2006/05/06/stories/2006050604220100.htm

Back Forex reserves surge by $3.41 billion

Our Bureau

Mumbai , May 5

The country's forex reserves have surged by $3.41 billion for the week ended April 28, the largest inflow in a single week in the recent past.

According to currency traders, the spurt in the reserves was mainly on account of the Reserve Bank of India buying dollars from the open market.

The reserves rose to touch $160.67 billion in the week ended April 28, up from $157.262 billion in the previous week, according to the RBI's weekly statistical supplement. In the previous week, the reserves had gained by $2 billion. This is the 14th consecutive week that the country's reserves have posted gains.

The rise in the value of gold reserves also caused the accretion to the reserves.

Foreign currency assets increased by $2.861 billion to touch $153.598 billion during the week.

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

According to the chief currency dealer at a private bank, the RBI had been buying dollars in the week under consideration.

The total FII inflow into the equity market during that week was $436.6 million.

Dealers said that the rupee is overvalued by 5.32 per cent and that the RBI has been intervening to prevent it from gaining further.

Another reason the reserves have increased is that all the major currencies had appreciated against the dollar, during the week under review. The euro gained from $1.2390 on April 24 to $1.2630 on April 28.