India's forex reserves rise to $44.59 bln

The rupee has stood steady against the dollar in recent weeks

MUMBAI, India -- India's foreign exchange reserves climbed by $455 million to a high of $44.590 billion in the week to August 17, helped by an increase in foreign currency assets, according to data released by the Reserve Bank of India on Saturday.

But analysts said the rise was more likely because of revaluation of India's foreign currency basket following the dollar's recent spell of weakness in global markets rather than big dollar inflows.

An estimated 15 percent of India's reserves are denominated in currencies like the euro, yen and sterling.

"There must have been a huge revaluation of the currency basket as the dollar has definitely depreciated vis-a-vis other currencies," said Indranil Pan, associate vice-president at Kotak Mahindra Capital Company.

"Otherwise foreign institutional investment has not risen too much, nor has foreign direct investment," he said.

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In the past month and a half, the dollar has dropped more than 10 percent against the euro and is nearly five percent lower against the yen.

The rupee was steady around 47.1200 per dollar through the August 13-17 week with by dollar-buying by state-run banks that dealers say could have been on behalf of the central bank to keep the rupee from appreciating.

Dollar supplies in the market have been from usual exporter remittances, some foreign portfolio investment inflows and some inflows from firms like HDFC Bank which raised money from foreign investors recently.

Pan said the rupee was likely to hold a steady line against the dollar.

"India's imports are down, so the demand for dollars is lower," he told Reuters.

"We also have the comfort of so much foreign exchange reserves and the rupee is not as overvalued as before, so I don't see any reason for much rupee-dollar movement."

Data from the capital markets regulator the Securities and Exchange Board of India showed foreign funds were net buyers of $83.3 million of stocks and bonds in August so far. Net investments since January are a little over $2.6 billion.

Reuters contributed to this report.