MUMBAI– A strengthening rupee on account of healthy buying activity buoyed India’s foreign exchange reserves (Forex) kitty by $943.4 million, experts said on Saturday.

According to the Reserve Bank of India’s (RBI) weekly statistical supplement, the overall Forex reserves stood at $352.04 billion for the week ended December 25.

For the previous week ended December 18, the country’s foreign reserves had plunged by $1.40 billion at $351.10 billion.

Market observers pointed-out that strengthening rupee on account of unwinding of long-positions of US dollar prompted India’s central bank to purchase greenbacks.

The rupee has strengthened on the back of fresh demand in anticipation of healthy foreign capital influx into the central and the state governments’ bonds from January 1 onwards.

This led the Indian central bank to intervene in the open markets by purchasing greenbacks to keep the rupee value competitive for domestic exporters.

On a weekly basis, the rupee strengthened by 19 paise at 66.21 (December 23) to a US dollar from its previous close of 66.40 to a greenback (December 18).

“US dollar purchases by the central bank post the FOMC (Federal Open Market Committee) has led to the rise in the overall reserves,” Anindya Banerjee, associate vice president for currency derivatives with Kotak Securities, told IANS.

“The central bank bought greenbacks on account of strengthening rupee due to unwinding of (US Dollar’s) long-positions in anticipation of rupee demand.”

On September 29, the RBI had said that it intended to provide a more predictable regime for investment by foreign funds and decided to raise their exposure limits in phases in central government securities to 5 percent of the outstanding stock by March 2018.

In another key decision, the central bank had set a separate limit for investment by such funds in state development loans, which are to be increased in phases to reach 2 percent of the outstanding stock by March 2018.

The RBI’s decision is expected to usher in around $2.5 billion by this fiscal end.

Other analysts attributed to the rise in the reserves value on interest payments received by the RBI on foreign securities held by it.

“It is assumed that the RBI may have received year end interest payments on foreign securities it holds. This might be one of the reasons for the rise in overall reserves,” an analyst told IANS.

In addition, the foreign currency assets (FCAs) which constitutes the largest component of India’s Forex reserves gained by $922 million to $329.19 billion in the week under review.

Notwithstanding the gain in overall Forex kitty, the country’s gold reserves remained stagnant at $17.54 billion.

Gold reserves had plunged by $1.14 billion at $17.54 billion during the week ended December 4, as international prices crashed to a six-year low.

However, the special drawing rights (SDRs) were higher by $16.2 million at $4.01 billion.

Similarly, the country’s reserve position with the International Monetary Fund (IMF) rose. It edged-up by $5.2 million to $1.30 billion.