Forex reserves swell by $2.7 billion to 5-month high

KOLKATA: Foreign exchange reserves has swelled by $2.7 billion in the week to November 22 to $286.264 billion, a five-month high, as Reserve Bank of India continued to mobilise dollars using the subsidised swap facility.

Forex dealers said banks made a beeline to take advantage of the facility which will end on November 30. They expect more inflows this week as RBI has categorically said that it will not extend the deadline.

FirstRand Bank’s head for forex and fixed income Paresh Nayar said that the addition in reserves was contributed by the dollar inflows through swap facility as well as by the change in valuation of the currency.

Reserves in rupee terms rose Rs 159 billion to Rs 18,007 billion.

RBI has mobilised more than $22 billion through the special swap window for non resident Indians and overseas borrowings.

RBI allowed banks to swap dollars mobilised under FCNR-B with a minimum three years maturity and having a lock in period of one year, at a fixed rate of 3.5% for the tenor of the swap. It has also relaxed banks overseas borrowing norms and allowed them to raise capital abroad to the tune of 100% of their paid-up equity capital.

Foreign currency rose $2.761 billion to $258.665 billion. The week before this saw an addition of $820 million in the reserves.

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