Mumbai: After a gap of four years, India's foreign exchange reserves touched a new lifetime high at USD 322.135 billion for the week ended January 16, driven by higher inflows and lower outgo of forex on account of a big slump in global crude prices.
The reserves jumped by USD 2.66 billion to reach USD 322.135 billion during the week, the Reserve Bank data showed on friday.The forex kitty for the first time had crossed USD 320 -billion mark (USD 320.79 billion) for the week ended September 2, 2011.
“Strong FII inflows and reduction in import burden due to a record fall in oil prices have led to accumulation of the reserves,” Harihar Krishnamoorthy, Treasury Head at FirstRand Bank, told PTI.
Overseas investors have pumped in USD 3,442.29 million into Indian market markets in this month so far, according to the data given by Central Depository Services. “Dollar selling from exporters in the market has contributed towards higher forex reserves,” said a chief dealer with a state-owned bank.
Analysts also attributed the rise in the reserves to the likely buying of dollars by the RBI.
RBI has been net purchaser of dollars for the most part of the current fiscal. Last November, the apex bank net purchased USD 3,081 million worth of the greenback from the spot market while in October the figure stood at USD 2,703 million.
The foreign currency assets (FCAs), a major constituent of overall reserves, jumped USD 2.685 billion to USD 297.53 billion in the reporting week, the data showed. FCAs, expressed in dollar terms, include the effect of appreciation and depreciation of non-US currencies such as the euro, pound and yen, held in reserves. Foreign brokerage Bank of America-Merrill Lynch said in a report today that it expects the forex reserves to reach 10 months' import cover by March 2016, which currently is at about eight months.
Ever since the Narendra Modi government came to power in May-end, foreign funds had been pumping more and more dollars into Indian equities.
In 2014, FIIs pumped in USD 16.15 billion into Indian equities while they have exhausted the cap of USD 30 billion in Government Securities. They have parked USD 32.5 billion in corporate bonds, which is 64 per cent of their cap of USD 51 billion.