Nominal Exchange Rate (Rs/US $)
42.0
42.5
43.0
43.5
44.0
44.5
45.0
1-Aug
7-Aug 13-Aug 19-Aug 25-Aug 31-Aug
Net Weekly FII flows (mln US $)
-600
-400
-200
0
200
400
600
800
Aug 1-5 Aug 8-12 Aug 16-
19
Aug 22-
26
Aug 28-
31
BSE Index
7400
7600
7800
8000
1-Aug
7-Aug
13-Aug 19-Aug 25-Aug
31-Aug
Call Money Rate
2.50
3.50
4.50
5.50
6.50
1-Aug
7-Aug 13-Aug 19-Aug 25-Aug 31-Aug
A Summary of Economic News in India, August 20051
IMF New Delhi Office
Markets
• Rupee depreciated. The rupee/dollar rate depreciated
by 70 paise during the month on higher global oil
prices and a visible slowdown in FII inflows. The six-
month forward premium on the US dollar was 0.46
percent at month-end, 67 bps lower than at end-July
2005.
• Portfolio inflows slowed down. Portfolio inflows
witnessed a sharp slowdown, especially after the
first week of August. Net inflows were US$ 909
million in August 2005 compared to US$ 528
million in August 2004 and US$ 1.8 billion in July
2005.
• Reserves increased. Foreign reserves, measured
in US dollars, increased amidst reports that the
RBI had made purchases of US$ 5 billion to
prepare the market for the smooth redemption of
US$ 5.5 billion India Millennium Deposit (IMD), raised by the State Bank of India (SBI). Reserves, which
increased by US$ 3.1 billion, US$ 2.0 billion and US$ 1.7 billion in weeks ending July 29 and August 5, &12,
respectively, declined by US$ 1.2 billion for week ending August 19. Reserves were US$ 143.2 billion on
August 19. HBL 7, 14, 21, 28 & FE 22
• Stock market volatile. The stock market turned volatile
during the month on concerns over high international oil
prices, poor monsoon rains in August and a distinct
slowdown in FII inflows since the first week. On a
month-end basis the BSE index was higher by 170
points, or 2.2 percent.
• Call money rate stable. The call rate stayed mostly at
around the reverse repo rate of 5.00 percent on
comfortable liquidity in the market, except on August
4, 5 and 19, bank reporting days.
• T