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Despite its growing foreign exchange balance, India's latest current account balance (April-September 2007) was -$10.7 billion, a marginal increase from -$10.4 billion in the same period in 2006 says the latest Reserve Bank of India (RBI) data on sources of foreign exchange. The major sources of accretion to foreign exchange reserves during April- September 2007 have been foreign investment, external commercial borrowings (ECBs) and short-term credit. The accretion to the foreign exchange reserves was $0.4 billion on a BoP basis (excluding valuation effects) during April-September 2007. Valuation gain, reflecting the appreciation of major currencies against the US dollar, accounted for $8.2 billion in total reserves during April-September of 2007 as against a valuation gain of $5.1 billion during the corresponding period of previous year. The foreign exchange reserves have increased by an amount of $48.6 billion during April-September 2007 including the valuation effects against an increase of $13.7 billion during April-September 2006. The main components of accretion to foreign exchange reserves during April-September 2007 are (see table below): Table: Sources of Accretion to Foreign Exchange Reserves | (US $ billion) | | Items | April-September 2007 | April-September 2006 | | I. | | Current Account Balance | -10.7 | -10.3 | | II. | | Capital Account (net) (a to f) | 51.1 | 18.9 | | | a. | Foreign Investment | 22.2 | 6.1 | | | b. | External Assistance | 0.7 | 0.4 | | | c. | External Commercial Borrowings | 10.6 | 5.7 | | | d. | Short-Term Trade Credit | 5.7 | 3.9 | | | e. | Banking Capital | 5.3 | 3.3 | | | | Of which: NRI Deposits | -0.1 | 2.2 | | | f. | Other Items in Capital Account* | 6.6 | -0.5 | | III. | | Valuation change | 8.2 | 5.1 | | | | Total (I+II+III) | 48.6 | 13.7 | | * Other items in capital account, apart from 'Errors and Omissions', also comprise leads and lags in exports, funds held abroad, advances received pending issue of shares under FDI and transactions of capital receipts not included elsewhere. The transactions of these capital receipts mainly constitute cross border transactions relating to financial derivatives and hedging (margin payments and settlement), migrant transfers and other capital transfers (transfers of capital assets by the Indian migrants abroad, investment grants, payments of compensation), realisation of guarantees, etc. |
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