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Background
The Reserve Bank of India (RBI)
had, on January 31, 2003, issued a Press Note on conclusions of a study conducted
by its Department of Economic Analysis and Policy (DEAP) on Sources of Accretion
to Foreign Exchange Reserves during April-November 2002. Subsequent to this,
the RBI has been regularly updating and releasing information on ‘Sources of
Accretion to Foreign Exchange Reserves’ through press releases which are available
on the RBI website (www.rbi.org.in).
Balance
of payments (BoP) data for the quarter April-June 2006 are now available.
These data have been released on RBI website (www.rbi.org.in)
on September 29, 2006.
Sources of Accretion to Foreign
Exchange Reserves April-June 2006
The following table shows the main
components of accretion to foreign exchange reserves during April-June 2006:
Table 1: Sources of Accretion to
Foreign Exchange Reserves
(US $ billion)
|
Items
|
April-June
2006
|
April-June
2005
|
|
I.
|
|
Current Account Balance
|
-6.1
|
-3.6
|
|
II.
|
|
Capital Account (net) (a to f)
|
12.5
|
4.8
|
| |
a.
|
Foreign Investment
|
1.2
|
2.2
|
| |
b.
|
Banking Capital
|
5.1
|
0.8
|
| |
|
Of which: NRI Deposits
|
1.2
|
-0.1
|
| |
c.
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Short term credit
|
0.4
|
-0.2
|
| |
d.
|
External Assistance
|
--
|
0.2
|
| |
e.
|
External Commercial Borrowings
|
3.6
|
1.1
|
| |
f.
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Other items in capital account
|
2.2
|
0.7
|
|
III.
|
|
Valuation change
|
4.9
|
-4.3
|
| |
|
Total (I+II+III)
|
11.3
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-3.1
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-- : Negligible
Major sources of accretion to foreign
exchange reserves during the first quarter 2006-07 have been External Commercial
Borrowing (ECB), banking capital and foreign investment. The accretion to the
foreign exchange reserves was of the order of US $ 6.4 billion on a BoP basis
(excluding valuation effects) during April-June 2006. Valuation gain, reflecting
the appreciation of major currencies against the US dollar, accounted for a
rise of US $ 4.9 billion in total reserves during the first quarter 2006-07
as against a valuation loss of US $ 4.3 billion during corresponding period
previous year. Taking into account the valuation gain of US $ 4.9 billion, foreign
exchange reserves recorded an increase of US $ 11.3 billion during April-June
2006-07 (a decrease of US $ 3.1 billion during April-June 2005-06).
P.V.Sadanandan
Manager
Press Release : 2006-2007/451
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