Indias forex reserves july 2017

India’s forex reserves may cross $400 billion in September: Morgan Stanley.

Mumbai: If the present pace of dollar accretion to India’s forex reserves continues, which crossed past $393 billion, the reserves may hit the $400-billion mark by the week to 8 September 2017, according to a report by financial services firm Morgan Stanley.

India’s forex reserves have been rising with a total accretion of $4.389 billion to the kitty since 14 July 2017. It had touched a record high of $393.448 billion after it rose by $581.1 million in the week to 4 August 2017.

“If the pace of foreign exchange reserves is similar to that of the past four weeks, the reserves would hit $400 billion by the week to 8 September. Indeed, adjusted for forward positions, forex reserves are already at $407 billion,” Morgan Stanley said in a note on Thursday.

The pace of forex accretion has been the strongest since 2015 and this has also been one of the strongest in Asia ex-Japan in the past 12 months, the report said.

The surge in the reserves is on account of high inflows from overseas investors.

On a 12-month trailing sum basis, foreign direct and institutional flows remained robust at $63 billion and $17 billion. This robust inflow of capital coupled with weak credit offtake (credit growth was 6.2% as of 21 July) has meant interbank liquidity remains in strong surplus mode of $42 billion, the report said.

It said as capital flows remain buoyant, this puts appreciation pressures on the currency and could lead to excess liquidity, which would create challenges for the Reserve Bank of India (RBI) to manage its monetary policy.

“The monetary policy will only take into account the impact of currency appreciation on inflation into its policy decision, rather than tackling currency rise per se,” the report said.

The RBI has already intervened in the currency markets—in both spot and forwards markets—to the tune of $3 billion and $17 billion, respectively, as of June 2017. Since then, the reserves have continued to rise, suggesting the RBI may have continued to accumulate dollars in forex reserves in July and August.

Since June, the RBI has had to withdraw liquidity by means of Rs30,000 crore of open market operations sales but despite these withdrawals, call rates are still closer to the reverse repo rate.

“As the excess liquidity challenge looks set to persist, the RBI will need more tools to manage excess liquidity, such as the standing deposit facility which is still under consideration,” the report said.

India's foreign exchange reserves rise $10 billion in FY2017.

In an update, the Reserve Bank of India said that India's foreign exchange reserves stood at $369.95 billion as of March 31, 2017.

India's foreign exchange reserves rose $2.02 billion to $369.95 billion as of March 31, 2017, marking an increase of $10.20 billion since the commencement of the financial year. The reserves stood at $359.76 as of April 1, 2016, according to RBI updates.

The rise assumes significance in the context of three major events during the financial year that could have dented the country's forex reserves — demonetisation, the redemption of FCNR deposits that were issued in 2013 to stem rupee's fall and fears of capital flight due to the US Federal Reserve hiking interest rates.

India had raised about $25 billion by way of three-year FCNR deposits in September 2013 to overcome the sharp fall in its domestic currency. The deposits were due for redemption last year and was evident when the reserves fell $4.34 billion in the first week of October.

"Some $25 billion in foreign currency non-resident or FCNR (B) deposits raised to stabilize the rupee in 2013 will be maturing in Sep-Nov. About four-fifths of these deposits are unlikely to be rolled over, which in turn, could result in $20 billion in outflows. Expect some short-term impact on the balance of payments, strain on domestic liquidity conditions and a temporary bout of rupee volatility," Radhika Rao, economist, group research at DBS Bank had said in her June 10 note last year.

However, the country managed it without any major disruption to its reserves.

The next major macroeconomic shocker, so to speak, was Prime Minister Narendra Modi's decision to demonetise Rs 500 and Rs 1,000 notes on November 8 last year, triggering fears of an economic slowdown and consequent dollar outflows.

The equity inflows dropped from $6.19 billion in October to $4.67 billion next month and $3.34 billion in December 2016. Still, the overall FDI equity inflows rose 22 percent during April-December 2016 to $35.84 billion, compared to $29.44 billion in April-December 2015.

Another event that could have hit dollar inflows and thereby India's forex reserves was the decision by the US Federal Reserve to hike interest rate by 25 basis points on March 15.

On the positive side, the BJP's massive win in the Uttar Pradesh elections, the results of which were declared on March 11, fuelled a massive stock market rally driven by foreign investors. Inflows into debt market also saw a surge, resulting in reserves remaining stable and the rupee gaining strength.

March saw foreign investors buying Indian bonds in a big way. "Indian debt markets received Rs 272.6 billion of inflows in March (after Rs 57.2 billion in February), its highest monthly inflow in at least five years. Similar to February, inflows were driven by flows into central government debt. During the month, foreign investors increased their holdings of IGBs by Rs 175.8 billion (Rs 50.4 billion in February), the largest monthly increase in 30 months," Nomura analysts said in a note on Wednesday.

The domestic currency closed at 64.85 to the US dollar on March 31, 2017, a gain of 2.1 percent over the March 31, 2016 closing of 66.26. The rupee ended at 64.28 to the US dollar on Friday.

"Positive sentiment generated by good growth prospects of the Indian economy, sound macroeconomic fundamentals with low inflation, low current account deficit, adequate forex reserves, etc. are driving capital inflows contributing to the strengthening of the rupee," Arjun Ram Meghwal, Minister of State for Finance, said in a written reply to a question in the Lok Sabha on Friday.

The BSE Sensex fell 220 points to 29,707, while the NSE Nifty ended 64 points lower at 9,198. Top Sensex losers included Sun Pharma, Lupin, Adani Ports and Reliance Industries.

"There was profit booking which pulled down the market over half percent. Traders were booking profit on account of weak global cues, increased oil price and fall in USDINR. Geo-political factors pulled down market. Select Asian and European markets slipped after the news that the United States launched missiles at an airbase in Syria in response to Syrian forces' alleged use of chemical weapons," brokerage Motilal Oswal Securities said in a note on Friday evening.

The next week's trading on stock exchanges will be influenced by companies declaring their fourth quarter (Q4) and full-year results. Investors and analysts would be keenly tracking Infosys that will come up with it results on April 13. Management commentary will determine the trend not only for the company's share price but also for the entire IT pack and the stock markets as a whole.

The government may also declare the external trade data for March during the week. For the 11-month period endedFebruary 2017, India's exports had gained 2.52 percent to $245.41 billion YoY, raising hopes of ending the fiscal with $270 billion. Imports fell 3.67 percent to $340.69 billion.

In a related update, the government said that the number of active foreign companies operating in India stood at 3,384 at the end of March 2017, with 1,484 registered in Delhi, followed by 823 in Maharashtra. The new registrations in 2016-17 rose to 161 from 149 in the previous fiscal and 157 in 2014-15.

The fund infusion into state-run banks in 2016-17 was Rs 24,997 crore, with the biggest share going to State Bank of India (Rs 5,681 crore), followed by Indian Overseas Bank (Rs 2,651 crore) and Punjab National Bank (Rs 2,112 crore).

India's share of the world economy was 2.83 percent, at $2.09 trillion GDP in 2015, the government said, citing World Bank statistics.

"According to the World Bank Group, assuming a simple linear extrapolation of growth rates and assuming India's GDP grows at 8% in US dollar terms, and France and the UK grow at 2.5% in US dollar terms, India's contribution to the global economy may surpass France in 2018 and the United Kingdom in 2021," Meghwal said in response to another query in the Lok Sabha on Friday.

In yet another positive news, India jumped 12 spots to rank at No. 40 globally in the list of WEF's Global Travel and Tourism Competitiveness Report 2017.

"India continues to enrich its cultural resources, protecting more cultural sites and intangible expressions through UNESCO World Heritage lists, and via a greater digital presence," WEF said.

The report ranks 136 countries across 14 parameters, showing how countries could deliver benefits through their travel and tourism sector.

India Vs China: A comparison of economic growth.

Here is a comparison between Indian and Chinese economy.

New Delhi: Prime Minister Narendra Modi and Chinese President Xi Jinping on Tuesday held their first substantial bilateral meeting on the sidelines of a summit of the BRICS grouping of nations after the Dokhlam standoff which had put ties between the two countries under strain.

Chinese President told PM Modi that the two Asian giants are development opportunities for each other, not threats.

Here is a comparison between Indian and Chinese economy.

Chinese economy: USD 11.22 trillion.

Indian economy: USD 2.45 trillion.

India’s GDP growth for June (2017) quarter was at 5.7 percent.

China's GDP growth for second quarter (2017) was at 6.9 percent.

China's July (2017) trade balance was $46.74 billion.

India's July (2017) trade deficit was $11.49 billion.

India's trade deficit with China was at USD 46.56 billion (2016).

China's exports to India totaled USD 58.33 billion (2016).

India's exports to China was at USD 11.76 billion (2016).

China's gold reserves rose to $75.084 billion (Latest data).

India's gold reserves rose $19.94 billion (Latest data).

India's forex reserves was $3.081 trillion (Latest data).

China's forex reserves for July USD 394.55 billion (Latest data).

The registered unemployment rate in Chinese cities stood at 3.95 percent at the end of the second quarter (2017), the lowest level in recent years.

India's number of employed in August (2017) was at 4.4%.

India's Forex Exchange Reserves Jump By USD 1.2 Billion.

India's foreign exchange reserves increased by USD 1.2 billion to touch USD 401.942 billion in the week to December 1, according to the RBI data.

The surge in reserves was aided by an increase in foreign currency assets, a major component of the overall reserves.

The reserves once again crossed USD 400 billion mark in the previous week, after they rose by USD 1.208 billion to USD 400.741 billion.

The foreign currency reserves increased by USD 1.151 billion to USD 377.456 billion for the reporting week, the RBI said today.

Expressed in the US dollar terms, foreign currency assets include the effect of appreciation or depreciation of the non - US currencies such as the euro, the pound and the yen held in the reserves.

After remaining stable for many months, gold reserves also rose by USD 36.5 million to USD 20.703 billion.

The special drawing rights with the International Monetary Fund rose by USD 4.9 million to USD 1.502 billion.

The country's reserve position with the Fund also rose by USD 7.4 million to USD 2.280 billion, the Reserve Bank of India said.