October 6, 2002	Sunday	Rajab 28, 1423

MUMBAI, Oct 5: India’s foreign exchange reserves rose for the second straight week to their highest ever level boosted by exporter remittances and inflows from non-residents, analysts said on Saturday.

Data released by the Reserve Bank of India (RBI) showed the nation’s foreign exchange reserves stood at a record $62.721 billion on September 27, an increase of $200 million on the week.

Analysts said the strength of the Indian rupee amid a weakening dollar environment had encouraged exporters and investors to step up their repatriations.

The rupee has gained nearly 1.5 per cent from its life lows struck in mid-May and has moved from being undervalued to fairly valued on a trade weighted basis.

The rupee ended on Friday at an eight-month closing high of 48.3600/3625 to a dollar.

The record foreign currency levels are cushioning concerns over the high world oil prices, sparked by fears of an attack on Iraq by the United States.

Oil prices rose to a 19-month high on September 24, on worries that the attack on Iraq could disrupt supplies from the Gulf region which provides a quarter of the world’s oil.

Prices continue to hover around the $30-to-a-barrel mark, despite the United States softening its stance on Iraq, partly due to the “war premium” factor.

Analysts said there were other reasons for the high level of foreign exchange reserves.

There are the RIB redemptions coming up next year and a healthy forex reserves position also gives foreign investors the confidence that the local currency can be defended in adverse times, said an economist at the forex desk of a private bank.

The Resurgent India Bonds (RIBs) were issued in 1998 to raise $4.2 billion to fund infrastructure projects.

They are due for redemption in August 2003.

India launched the RIBs to make up for shortfalls in foreign inflows following economic sanctions imposed by the United States over India’s nuclear tests in May 1998.

But in the months ahead analysts expect some moderation in the rise in the country’s foreign currency reserves as exports growth slows down.

India’s merchandise exports rose 6.55 per cent on the year in August, down from 17.47 per cent year-on-year recorded in July.—Reuters