Ribs' Tranche Ups Forex Reserves By $367m

There has been an increase of $367 million in the country's foreign exchange reserves, which stood at $26.97 billion for the week ended August 21, 1998.

The increase was mainly on account of an accretion to foreign currency assets of $392 million during the week.

Two things that impacted the foreign exchange reserves during the week was the spot intervention by the Reserve Bank of India (RBI) to support the rupee, and inflows on account of the first tranche of Resurgent India Bonds (RIBs).

According to the latest weekly statistical supplement (WSS) released by the central bank, net RBI credit to the government fell by 4.9 per cent against a growth of 1.5 per cent in the previous week.

 

Consequently, the year-on-year growth in net RBI credit to government declined from 13.2 per cent seen as of week ended August 7 to 7.7 per cent as of the week ended August 14. In absolute terms, this was lower at Rs 1,45,506 crore compared with Rs 1,52,958 crore in the previous week.

The central government's recourse to ways and means advances for the week ended August 14 was considerably lower at Rs 526 crore compared with Rs 7,483 crore as of August 7. The Centre has since come out with an on-tap issue of 15-year stock at 12.40 per cent which mopped up around Rs 1,190 crore. Money supply (M3) has been constantly growing at around 17.3 per cent, and as of July 31, it stood at Rs 8,61,623 crore.

The growth in money supply in the future will depend on a combination of factors such the deployment of RIB proceeds, the deceleration of the multiplier on account of the hike in cash reserve ratio and developments on the credit offtake front.

The growth in aggregate deposits with the banking system for the first time in this fiscal showed a negative growth of 0.1 per cent or Rs 888 crore for the fortnight ended August 14. Bank credit did not show any signs of picking up, registering a -0.2 per cent growth for the fortnight.

There was on the other hand a pick up in the growth of investments of banks. Investments grew at 9.5 per cent against 8.8 per cent in the previous fortnight. Investments of banks in government and other approved securities stood at Rs 2,40,023 crore (Rs 2,37,926 crore in the previous fortnight). The stock of 364-day treasury bills with the central bank was Rs 472 crore as on August 14, and has not shown any variation over the previous week.