Indiaâ€™s foreign exchange reserves rise to record high of US $426.416 billionDate: 29 June 2019 Tags: Basic Concepts
According to recently released Reserve Bank of India (RBI) data, India’s foreign exchange (forex) reserves has touched life-time high of US $426.42 billion after it surged by US $4.215 billion in the week to June 21, 2019. The rise in reserves was on account of increase in foreign currency asset, which is a major component of the overall foreign exchange reserves. In the reporting week, foreign currency assets increased by US $4.202 billion to US $398.649 billion. Earlier, India’s forex reserves had scaled record high of US $426.028 billion in the week to April 13, 2018.
Breakaway of forex reserves (in the reporting week)
- Foreign currency assets: It is major component of the overall reserves. It increased by US $4.202 billion to US $398.649 billion.
- Gold reserves: It remained unchanged at US $22.958 billion.
- Special drawing rights (SDRs) with the International Monetary Fund: It increased by US $4.2 million to US $1.453 billion.
- Reserve position with IMF: It also increased by by US $9.6 million to US $3.354 billion.
They are reserve assets held by central bank of the country in foreign currencies. These reserve acts as buffer to be used in challenging times. They are also used as back liabilities and also to influence monetary policy. Almost all countries in world, regardless of size of their economy, hold significant forex reserves.
Components of India’s FOREX Reserves: Foreign currency assets (FCAs), Special Drawing Rights (SDRs), Gold Reserves and RBI’s Reserve position with International Monetary Fund (IMF). FCAs constitute largest component of India’s forex Reserves. It is expressed in dollar terms and includes effect of appreciation/depreciation of non-US units like euro, pound and the yen held in forex reserves.