IIP deteriorates on rise in external liabilities in Q2: RBI

The net international investment position (IIP) or the difference between the nation's external financial assets and liabilities, deteriorated on the back of rise in the value of foreign-owned assets in the country, according to the RBI data.

The net claims of non-residents on the country, as reflected in the net IIP, increased by $17.7 billion to $317.2 billion at the end of December 2013, the Reserve Bank said in a report released today.

"This change in the net position reflected an increase of $39.9 billion in the value of foreign-owned assets in India vis-a-vis an increase of $22.2 billion in the value of Indian residents' financial assets abroad," it said.

The foreign-owned assets in India increased mainly due to increase of $23.6 billion in currency and deposits component of other investment, it said.

Direct investment in India and portfolio investment in India also increased by $8.6 billion and $5.6 billion, respectively, it added.

Assets of Indian residents abroad stood at $458.9 billion as at third quarter recording an increase of $22.2 billion over previous quarter mainly due to increase of $16.7 billion in reserve assets and increase of $5.8 billion in other investment abroad, mainly trade credit and currency and deposits.

Direct investment abroad observed marginal decline of $0.3 billion, it added.

Variation in exchange rate of rupee vis-a-vis other currencies affected change in liabilities, when valued in US dollar terms, it said.

Equity liabilities in US dollar terms increased by $16.3 billion, due to the stock valuation effect resulting from rupee appreciation, while net inflow was $11.5 billion during the period, it added.