India's central bank has increased its holding of foreign exchange assets at end-September even as overall currency reserves declined in the April-September period, it said in a report posted on its website late on Friday.
Around 40 percent of its reserves were invested in foreign-currency denominated assets which were mainly federal debt of major countries at end-September compared with 34 percent at end-March, the Reserve Bank of India (RBI) said in its half-yearly report on the position of foreign exchange reserves.
Nearly 58 percent of the remaining reserves is invested with other central banks, the Bank of International Settlements and the International Monetary Fund and the rest as deposits with foreign commercial banks, it said. The central bank said reserves fell $286.3 billion at end-September 2008 from $309.7 billion at end-March, and a valuation loss of $20.9 billion was the reason for the decline.
The current account deficit doubled in the April-September period compared with a year earlier as exports declined and rising commodity prices inflated the import bill. "Apart from the current account deficit, outflows under foreign institutional investors were the other major sources contributing to the decline in foreign exchange reserves during April-September," the RBI said.
Foreign investors dumped a net $13 billion worth of Indian shares in 2008 amid a global crisis. According to latest data, reserves were at $254.8 billion as on January 9, Asia's fourth-biggest pile after China, Japan and Taiwan. The data is available on its website: www.rbi.org.in.