It poured greenbacks

It did not rain. It poured. The dollars, that is. For the week ended January 4, 2002, India's the forex reserves were at $48.299 billion.

On December 20, the pile rose by $21.201 billion to reach $69.508 billion. By the time the year-end data are available, it will certainly cross the $70 billion mark.

Last week, the Reserve Bank of India has reportedly mopped up close to $700 million.

Add to this accretion due to the revaluation of yen and Euro, the reserve accretion last week could touch the $1 billion mark. For the week ended December 20 too the accretion was over $1 billion.

In fact, the accretion in the last two months of the year (from November 1 to December 20) was at $4.887 billion -- over 20 per cent of the year's pile.

The forex reserves as on April 5 was at $54.55 billion. This would mean that the accretion in the last nine months of the current fiscal has been $14.953 billion.

For the first time in 10 years since the Indian currency was freed, the rupee ended the calendar year with an appreciation against the dollar.

On Monday, the rupee touched an intra-day level of 47.9225 and closed at 47.9375/9400 against the dollar. With this, it has appreciated close to 1.08 per cent since the beginning of the calendar year.

On January 1, 202, the rupee closed at 48.27 against the greenback. But for the RBI's intervention, the rupee would have gained much more.

On a trade-weighted real effective exchange rate basis, the rupee is still undervalued by around 3 per cent.

Since 1993, when the Indian unit was freed (that is, its value was de-linked from the dollar), the rupee has depreciated against the dollar by an average of close to 5 per cent.

Only once, in 1994, did the value of the rupee remain virtually flat. The sharpest depreciation was witnessed in August 1995 when it lost 10.75 per cent, and 9.2 per cent in 1997.

The rupee showed the maximum stability between April 1993 and July 1995 when it moved in the 31.36-37 band. It fell 3.79 per cent last year and 6.47 per cent the year before.

2002: The Year That Was

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