(Updates to add details, milestone, quote)
MUMBAI, April 4 India's foreign exchange
reserves surged $5.04 billion in the week ending March 28, its
biggest weekly rise in four months, as the central bank started
to buy dollars regularly in an effort to build up its defences
against any potential global turmoil.
The country's forex reserves rose to $303.67
billion as of March 28 from $298.64 billion in the previous
week, the RBI said on Friday, the highest since the week ended
Nov. 29, 2013, according to Thomson Reuters data.
The Reserve Bank of India had been widely expected to build
up its reserves after the country was one of the emerging
countries worst hit during intense global market volatility last
year because of its record high current account deficit.
The rupee slumped to a record low in late August,
sparking India's biggest market turmoil since a balance of
payments crisis in 1991. The RBI had to sell dollars to defend
the rupee, sending reserves to a more than three-year low in
Conditions have swiftly changed, however, as the rupee is
now trading at eight-months highs after India sharply reduced
its current account deficit, thanks to RBI measures to raise
loans abroad and provide dollars directly to oil companies, as
well as government curbs on gold imports.
"The reserves must have risen due to a combination of
intervention by the RBI and repayment of swaps by oil
companies," said A. Prasanna, economist at ICICI Securities
Primary Dealership Ltd.
The Indian rupee rose 1.6 percent in the week ended
March 28, breaching the 60-mark for the first time in eight
months on the back of robust foreign fund inflows.
Foreign investors have been heavy buyers of India debt and
shares totalling a net $10.3 billion so far this year on
expectations of stable government after a general election and
signs of an improving economic recovery.
RBI Governor Raghuram Rajan said in an interview with the
Mint newspaper published on Thursday that the central bank
considered 55 to the dollar too strong a level, considering
factors like inflation, competitiveness and productivity.
"Going forward I expect RBI to keep intervening since flows
are expected to be strong into India in anticipation of stable
government," Prasanna said.
(Reporting by Suvashree Dey Choudhury; Editing by Ron Popeski)