Foreign exchange reserves rise by USD 1.62 billion for week ended April 3

The country's foreign exchange reserves increased by US $1.62 billion to  US $343 billion for the week ended April 3, Reserve Bank of India (RBI) data showed.

According to analysts, the domestic forex reserves got a boost during the week under review from an exponential rise in the foreign currency assets (FCA), the biggest component of the forex reserves.

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

The forex reserves hold nearly 20-25 per cent of the non-dollar currencies.

The reserves are also being build up by the RBI to absorb any future global financial shocks like the one witnessed in June 2013.

"The reserves are being build-up to counter any future financial shocks like the one which was witnessed at the time the tapering announcements were made. Apart from that, the reserves will also act as a support to the Indian rupee," Anindya Banerjee, Kotak Securities senior manager, currency derivatives, told IANS.

"The Indian rupee is very stable currently and the reserves will make sure that it will remain so. A healthy (level of) reserves will make sure that any other external shocks are taken care of," Banerjee added.

The central is cautious about the US Federal Reserve's stand that the rate hike in US interest rates might take place in the later part of 2015.

With higher interest rates in the US, the foreign portfolio investors (FPIs) are expected to be led away from the emerging markets such as India.

For the previous week ended March 27, domestic foreign exchange reserves had increased by US $1.38 billion to US $341.37 billion. The forex reserves had risen by US $4.26 billion to US $339.99 billion in the week ended March 20.

The FCA grew by US $2.40 billion at US $318.64 billion in the week under review.

The foreign currency assets in the previous week (March 27) rose US $1.35 billion at US $316.23 billion. It had gained US $4.53 billion at US $314.88 billion in the week ended March 20.

The country reserve position with the International Monetary Fund (IMF) in the week under review was US $5.4 million higher at US $1.30 billion.

The value of special drawing rights (SDRs) augmented by US $16.7 million in the reporting week at US $4.02 billion.

However, gold reserves were down by US $799 million at US $19.03 billion for the week. The gold reserves were static since March 6, when it fell by US $346.2 million at US $19.83 billion.