Foreign direct investment (FDI) inflows during the first half of the year amounting to US dollars 413 million, stated the Central Bank in its Monetary Policy Review for this month (August).

"It is encouraging, and served to demonstrate that the target of US dollars 1 billion set for 2011 is largely on track," the Central Bank added.

It also said that the performance in the external sector has been encouraging with increased foreign trade, improved worker remittances and inflows to the services account, driven also by higher earnings from tourism.

The gross official reserves (without ACU balances) increased to US dollars 8,158 million by 16 August 2011 from US dollars 6,610 million recorded at end December 2010. With increased inflows, the rupee has appreciated by 0.96 per cent against the US dollar so far during the year, the Central Bank said.

With increased government revenue and contained expenditure, the government maintained the fiscal deficit target during the first half of 2011 in line with the budget. The overall deficit as a percentage of GDP during the first six months was also lower than that in the corresponding period in 2010, the Bank further said.