India’s inflation jumped to a two-year high of 6.73 per cent, the government said on February 15, prompting a cut in diesel and petrol prices and raising expectations of more rates hikes to stabilise prices. Following the inflation data on February 15, India’s oil minister Murli Deora announced to reporters that prices for petrol would drop two rupees (4.4 US cents) or around 4.5 per cent while diesel prices would fall 1 rupee or 3.2 per cent effective at midnight.

State-owned oil companies use diesel and petrol revenues to subsidise the sale of kerosene, widely used as a cooking fuel by the poor, and the price cuts will require more subsidy by the government, Deora said. The burden of the price reduction will be met partly by revenue and partly through oil bonds already approved by the government. The government has already cut import duties on cooking oil, cement and other products and banned wheat exports in a bid to lower prices.

India’s forex reserves up by $5.031b

India’s forex reserves increased by a whopping 5.031 billion to stand at USD 185.078 billion during the week ended February 9, as against USD 180.047 billion during the week ended February 2. The reserves were up by USD 995 million during the preceeding week ended February 2, compared to a week ago period.

Foreign currency assets increased by USD 5.119 billion to USD 178.084 billion during the seven day period ended February 9, 2006. Foreign currency assets in dollars include effect of revaluation of non-US currencies such as Euro, Sterling and Yen held in reserves.