Forex kitty soars in spite of FII withdrawals

The FII pullout has happened after they invested a record 17 billion in 2007. A sizeable quantity came to India after the US Fed started cutting rates in September 2007. 8220;Now with the US Fed cutting rates by another 0.75 per cent last week and interest rates in India remaining unchanged, there could be further rise in inflows. Dollar inflow is likely to increase as investors are likely to take advantage of the rate differential in both the countries,8221; said a banking source.

Bankers said the continuing inflow will strengthen the rupee further. 8220;FII investment is only one component. Inflows through other sources are continuing,8221; said an official. 8220;India is already the largest beneficiary of emigrant remittances in the world with 27 billion coming in 2007.8221; According to an RBI statement, major sources of accretion to foreign exchange reserves during April-September 2007 have been foreign investment, external commercial borrowings ECBs and short-term credit.

Meanwhile, the BSE Sensex lost 765.69 points or 4.85 per cent to 14,994.83 during the week ended March 19. The Sensex is now down 6,212 points or 29.29 per cent from its all-time high of 21,206.77 hit on January 10, 2008.

Climbing numbers

8226; Forex reserves rise by 31.1 billion in 2008 so far

8226; FIIs pull out 3.597 billion in 2008 so far

8226; In March, FIIs sell 795 million worth stocks