India's foreign exchange reserves rose marginally by $673 million to $294 billion for the week ended January 27. According to the Reserve Bank of India (RBI), increase in the foreign exchange reserves is mainly on account of revaluation in the foreign currency assets. The foreign currency assets rose by $614 million, propelled by appreciation in the rupee to $260 billion.
According to experts net inflow from foreign institutional investors (FII) is responsible for the appreciation in the rupee which has helped the rise in foreign currency assets. The net buy by FIIs stood at $27.6 million for the whole of January 2012.
Also, the rupee has also risen by about 9 per cent, since the beginning of 2012 backed by a series of measures taken by the central back to curb excessive volatility in the rupee. Some of the measures included increasing FII investment limit in government and corporate bonds, deregulation of interest rates on NRE and NRO deposits, relaxation of external commercial borrowings and direct intervention by the RBI in the foreign exchange market.
