Forex reserves up $1.52 billion

Mumbai: The country’s forex reserves rose by $1.52 billion to $281.9 billion in the week ended October 9, the Reserve Bank of India (RBI) said in its weekly statistical supplement released on Friday.

While foreign currency assets climbed $1.48 billion to $264.9 billion, gold reserves were unchanged at $10.3 billion, the RBI said. Special drawing rights with the International Monetary Fund (IMF) increased by $35 million to $5.24 billion, while reserves with the IMF rose by $9 million to $1.37 billion. The rupee has advanced 0.2% this week to 46.31 against the dollar close, on Friday, as against 46.23 on Thursday. It had touched an intraday high of 45.75 on Thursday. Going forward, there are expectations of rupee appreciation against the dollar, say analysts.

Traders noted that going forward; the rupee may weaken against the dollar if the latter stays firm against the euro. Dollar demand from oil companies and other importers may also weigh on the rupee. At the same time, rupee will also take cues form the domestic share market. Abheek Barua, chief economist with HDFC Bank believes that the appreciation bias in the rupee will continue.

“ECB flows, FDI, trade credit and other debt flows will also play a critical role in determining the currency’s direction and momentum. Debt inflows in particular could pick up given the emergence of the differential monetary policy stance adopted by central banks in the developing world as against the advanced countries,” he said.

Barua expects the rupee to trade in the range of 46-47.20 in the near-term and move to a trading range of 45-46 by December 2009.

“As long as the dollar is weakening against other currencies, the rupee is bound to strengthen,” said S Srinivasa Raghavan, vice president and head of treasury with IDBI Gilts. Raghavan expects rupee to trade at 45-45.50 levels in the near term.

J Moses Harding, head of global markets group with IndusInd Bank said, “The dollar is definitely under pressure against major currencies with no sign of reversal, even on profit-booking and euro looks good for extending its gains against dollar. The stock market too is looking at highs, which were last seen in May-June 2008 and looks set for move into 17,350-17,500 ahead of another crucial resistance zone of 17,600-17,750. With RBI arresting rupee gains, the NDF arbitrage will further widen to provide better opportunity to arbitrage... play.”

He added that given the current rupee bull run, it would be in order to look for near term range-play within 45.75-46.25 and further into 45.25-45.75. However, he noted that RBI would not allow this move in a hurry. “We now stay tuned to range of 45.50-46.50 in the near term within 45.25-46.75 in the short term and await a decent reversal from 45.25-45.50 back into 48 and will give up on break below 45,” said Harding.

Meanwhile, the call money rate was seen in the range of 3.15-3.35%. Banks parked Rs 76,500 crore with the RBI.

The auctions in the government securities, held on Friday, saw devolvement on primary dealers under one security out of three. The cut-off yield for the new 5-year security was set at 7.32%, while the cut-off for auction of 6.35% bond maturing 2020 was set at 7.92%. The cut-off for auction of 7.35% bond maturing 2024 was set at 8.35%. An amount of Rs 210.30 crore was devolved on primary dealers under this security.

Traders noted that the yields hardened tracking devolvement of security on primary dealers at the auction....