After plunging nearly $56 billion since March 2008,Indias foreign exchange reserves got a big boost last week. The countrys forex reserves rose by $5.1 billion in the week ended March 20 due to a weakening of non-dollar assets like the euro,yen and the British pound. These assets were revalued as the dollar gained sharply against these currencies.
According to the latest figures available with the Reserve Bank of India (RBI),total foreign exchange reserves,including gold and SDR,rose by $5.1 billion to $253.8 billion. While foreign-currency assets swelled by $5,081 million,the value of gold and SDR (special drawing rights) notional currency with the IMF pegged to the dollar,euro,pound and the yen remained unchanged during the week. The reserves with the IMF increased by $21 million during the week.
In rupee terms,the reserves had fallen by Rs 10,983 crore during the same period.
Forex reserves are likely to rise further as foreign investors (FIIs) have been pumping money into Indian markets of late, said a banking source. FIIs put around $350 million in Indian stocks last week.
The rise in dollar came amidst the campaign by China for an alternative to the US dollar as a global reserve currency. Peoples Bank of Chinas governor Zhou Xiaochuan had floated the idea of a new currency reserve system to replace the dollar. He identified the International Monetary Funds Special Drawing Rights (SDRs),whose value is linked to a basket of currencies,as a possibility.
However,US treasury secretary Timothy Geithner said the dollar would still be the dominant reserve currency. The US just has to make sure the rest of the world is confident in its economic policy,he added.