FOREX KITTY TO CROSS $400 bn IN SEPTEMBER

Mumbai, Aug. 17: If the present pace of dollar accretion to the forex kitty continues, which crossed past the $393 billion, the reserves may hit the $400-billion mark by the week to September 8, 2017, says a report.

Forex reserves have been rising with a total accretion of $4.389 billion to the kitty since July 14, 2017.

It had touched a record high of $393.448 billion after it rose by $581.1 million in the week to August 4, 2017.

“If the pace of foreign exchange reserves is similar to that of the past four weeks, the reserves would hit $400 billion by the week to September 8. Indeed, adjusted for forward positions, forex reserves are already at $407 billion,” Morgan Stanley said on Thursday.

The pace of forex accretion has been the strongest since 2015 and this has also been one of the strongest in Asia exJapan in the past 12 months, the report said.

The surge in the reserves is on account of high inflows from overseas investors.

On a 12-month trailing sum basis, foreign direct and institutional flows remained robust at $63 billion and $17 billion.

This inflow of capital coupled with weak credit off take (credit growth was 6.2 per cent as of July 21) has meant interbank liquidity remains in strong surplus mode of $42 billion, the report said. —