Foreign exchange reserves top $200 bln for first time http://in.today.reuters.com/news/newsArticle.aspx?type=businessNews&storyID=2007-04-13T174200Z_01_NOOTR_RTRJONC_0_India-294113-1.xml
Fri Apr 13, 2007
MUMBAI (Reuters) - India's foreign exchange reserves topped $200 billion for the first time in early April, data showed on Friday, which analysts said reflected capital flows into the economy and central bank intervention to cap the rupee.
Foreign exchange reserves rose to $200.320 billion on April 6 from $199.179 billion a week earlier, the Reserve Bank of India (RBI) said. In Asia, India has the fifth-largest holdings of foreign exchange reserves behind China, Japan, Taiwan and South Korea.
Reserves have risen by $33.2 billion since Oct. 27 last year, which analysts saw it as evidence of suspected intervention by the central bank to curb the currency's appreciation.
The central bank bought $19.7 billion in the foreign exchange market in the four months to the end of February, data showed earlier this week. Before November, the central bank's previous intervention was in May, when it bought $504 million.
Intervention figures for March have not been released. The rupee has risen more than 10.5 percent from a three-year trough of 47.04 per dollar last July and on Friday it ended at an eight-year high of 42.51/52 per dollar.
The intervention has created a headache for the central bank as it tries to curtail money supply and credit growth to curb inflationary pressures. When the central bank sells rupees to buy dollars, it adds to the supply of rupees in the banking system.
Annual growth in money supply has remained stubbornly above 20 percent, higher than the central bank would like.
The central bank has stepped up policy efforts to rein in money supply and credit growth by raising interest rates and increasing the proportion of cash that banks should hold with it.
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