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Forex reserves scale new peak at $66.588 bn

India's foreign exchange reserves surged to a record high of $66.588 billion on stepped-up remittances in a weakening dollar environment and on foreign investments attracted to a strong domestic stock market.

Data released by the Reserve Bank of India showed currency reserves rose for the fourth straight week in the week to November 22.

The country's foreign exchange reserves rose by $564 million in that week and by an astounding $12.434 billion since the start of the financial year in April.

"The gains have been on a combination of factors -- exporters, non-residents and foreign funds investing in stocks," said Rajiv Anand, head of investments at Standard Chartered Mutual Fund.

Expatriate Indians have been increasingly converting their dollar deposits into rupees after the greenback eased against most majors amid doubts about the US economic recovery.

Besides, foreign funds have been steadily hiking their purchases in domestic bourses as valuations have turned attractive and following positive comments about the world's 12th largest economy by global agencies.

Moody's Investors Service said earlier this month it may upgrade India's foreign currency debt ratings because its external financial position had improved considerably.

Global index compiler Morgan Stanley Capital International raised India's weightage in the emerging market index after several leading companies increased the free float of their shareholdings.

Foreign funds bought Indian debt and equity assets worth over $125 million so far this month reversing net sales of $144.2 million in October. The benchmark 30-stock Bombay index has risen nearly 10 per cent in November, the highest single month gain in 2002.

Indian exports have posted a robust growth this year, rising a healthy 13.5 per cent in the first half of the financial year, after ending flat in the year to March 2002.

These factors have together boosted the rupee, partially convertible on the capital account, nearly two percent from its life low of 49.08 to a dollar struck in mid-May. It closed at 48.30/31 to a dollar on Friday.

And the country's reserves are likely to continue piling, analysts say.

"We can expect $400-500 million to flow into the country every week, unless oil prices flare up or the dollar strengthens considerably," said Anand.

Oil is India's biggest import item, accounting for about a third of the country's import bill.

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