Forex reserves jump by $ 676 mn

"We expect another $3-3.5 billion raised by the IMDs to be added to the reserves." The SBI, the country’s largest commercial bank, raised $5.5 billion from a deposit offer aimed at expatriate Indians. The offer closed on November 6.

Bankers say the central bank encouraged the SBI to launch the scheme to boost the country’s foreign exchange reserves, which have been falling since the rupee came under pressure from high global oil prices and a slowdown in foreign capital inflows.

Foreign exchange reserves are down 7.63 percent from amid-April peak of $38.341 billion, largely reflecting the central bank’s efforts to augment dollar supplies to prop up the rupee.

The rupee, convertible only on the current account, ended Friday at 46.785/795 and has lost over seven percent since the start of the year.

Dealers expect global oil prices, the euro’s movement and other regional and foreign fund activity in the stock markets to remain the keys to the rupee’s direction in the long term.

The RBI said variations in reserves also reflected changes in the value of the rupee against other currencies such as the euro, pound and yen, which are also part of the reserves basket. But the extent of the adjustment was not known since the composition of the reserves is not revealed.

Analysts said IMD inflows and the boost to foreign exchange reserves would ease the pressure on the balance of payments (BOP) position for the Financial year 2000/01 (April-March). Before the deposit scheme was launched, Indian officials expected the BOP position for the full year to be flat, compared with 1999/2000’s $6.4 billion surplus.

"We expect a surplus of $800-900 million at the end of the financial year mainly because of the deposit inflows," JP Morgan said. India posted a BOP deficit of $1.021 billion in the first quarter of 2000/01, but analysts expect that to widen further in the second quarter to absorb the full impact of firm global oil prices.

The country imports a large part of its crude oil requirements and its import bill for 2000/01 (April-March) is expected to jump to $17.5 billion from $12.3 billion a year earlier if global prices remain at $30 a barrel.