India’s forex kitty rose by $12.798 billion to $572.801 billion in the week ended March 17, the Reserve Bank said on Friday. In the previous reporting week, the reserves had dropped by $2.39 billion to a three-month low of $560.003 billion.
It can be noted that in October 2021, the country’s forex kitty had reached an all-time high of $645 billion. The reserves have been declining as the central bank deploys the kitty to defend the rupee amid pressures caused majorly by global developments.
For the week ended March 17, the foreign currency assets, a major component of the reserves, increased by $10.485 billion to $505.348 billion, according to the Weekly Statistical Supplement released by the RBI on Friday.
Expressed in dollar terms, the foreign currency assets include the effect of appreciation or depreciation of non-US units like the euro, pound and yen held in the foreign exchange reserves.
Gold reserves jumped by $2.187 billion to $44.109 billion, the RBI said. The Special Drawing Rights (SDRs) were up by $98 million to $18.219 billion, the apex bank said.
The country’s reserve position with the IMF was also up by $29 million to $5.125 billion in the reporting week, the apex bank showed.
FPI Flows In India
In March till 25th, FPIs have invested Rs 6,192 crore, inclusive of the block deals. They have been buyers in autos and auto components, financial services, metals and mining and power.
V K Vijayakumar, chief investment strategist at Geojit Financial Services, said, “FPIs sold heavily in IT. During the month, FPIs have been sellers in most emerging markets except China which continues to witness inflows due to the opening-up trade. FPIs are likely to be cautious in the near-term since there is a risk-off in equity markets globally due to the stress in the US banking system and crash in banking stocks."
He added that in India, inflows will be mainly targeted at domestic economy-facing sectors like banking, capital goods and autos. A contrarian trend in favour of IT and pharmaceuticals is likely in the near-term since the valuations of these segments have turned attractive after the recent corrections.
(With Inputs From PTI)
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