Forex kitty grows $6 billion as dollar count rises

Mumbai: India's foreign exchange reserves increased by $6.1 billion to $682.3 billion in the week ended July 24, as inflows from the Reserve Bank of India's FCNR(B) deposit scheme started to trickle in.

Foreign currency assets increased by $4.8 billion to $555.9 billion in the previous week. This increase is despite the central bank heavily selling dollars in the foreign exchange market last week to contain the rupee's fall. The currency had closed at 96.56 on July 24, very close to its record low of 96.96 as oil prices traded above $100 per barrel.

"The pick-up in reserves is likely due to the inflows seen via FCNR(B) deposits, which could have countered the dollar sales seen in the foreign exchange market last week," said Gaura Sengupta, chief economist at IDFC First Bank.


Traders estimate that the RBI may have sold approximately $1 billion-$1.5 billion last week in the foreign exchange market to defend the rupee from weakening past its record lows.

Gold reserves rose $1.3 billion to $103 billion in the previous week.

RBI Governor Sanjay Malhotra, in a media interview earlier this week, said that the country has received inflows of $32 billion under the various schemes announced by the government and the RBI.

At current levels, total reserves have declined from their peak of $728 billion earlier this year.