India's foreign exchange reserves vaulted $3.8 billion in the week through December 3 to a record $130.72 billion, as foreign capital poured into Asia's fourth-biggest economy and the dollar slid against the euro. The highest weekly increase in 2004 makes India's reserves the fifth-largest in the world, and was fuelled by the central bank's dollar-buying intervention to check a sharp rupee rally.
The Reserve Bank of India on Saturday said the latest data shows reserves grew by $30.1 billion this year, a 30 percent advance.
"This is really a huge, huge jump," said S.P. Prabhu, analyst at ICICI Securities.
"It reflects both the strong foreign fund inflows in that week and the substantial revaluation gains as a result of the dollar's fall overseas against other major currencies."
Foreign funds are showing unprecedented appetite for Indian assets, attracted by the economy's growth potential and good stock market returns.
India's economy is powering ahead, led by the services and manufacturing sectors, with latest official data showing industrial output grew 10.1 percent in the year through October.
Economic growth in the full year through March 2005 is forecast to be at least 6 percent.
Overseas portfolio investors' net purchases of local shares are at a record high of $7.76 billion so far in 2004.
The benchmark Bombay Stock Exchange index hit an intraday record high of 6,386.29 points on Monday, buoyed by a flood of foreign capital.
The surge in reserves, with an increase of $8.5 billion occurring in just the 4 weeks to December 3, comes amid a continued debate over how best India should use the stockpile.
Montek Singh Ahluwalia, the influential deputy chairman of the Planning Commission, has proposed that India draw about $15 billion from its reserves stockpile over the next three years to shore up the country' creaky infrastructure.