India’s foreign exchange reserves - an update

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RBI's latest update on forex holdings

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 India’s foreign exchange reserves - an update

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  • The story: Latest RBI data showed India’s foreign exchange reserves increased by USD 2.039 billion in the first week of October 2021. They stood at USD 639.516 billion. It had increased by USD 8.895 billion to a life time high, accounting for USD 642.453 billion during July end and September first week.
  • Foreign Currency Assets (FCAs): Foreign reserves rose account of an increase in the Foreign Currency Assets (FCAs). FCA increased by USD 1.55 billion, accounting for USD 577.001 billion.
  1. FCA is expressed in dollar terms, and comprises the effect of appreciation or depreciation of non-US units such as euro, pound and yen held in the foreign exchange reserves.
  2. Gold reserves increased by USD 464 million to USD reach at 38.022 billion.
  3. Special Drawing Rights (SDRs) with the International Monetary Fund (IMF) increased by USD 28 million, accounting for USD 19.268 billion.
  • Foreign exchange reserves: Assets held on reserve by central bank in foreign currencies are called as foreign exchange reserves. These reserves are used to influence monetary policy and back liabilities. It includes any foreign money held by a central bank, for instance, U.S. Federal Reserve Bank. India has now been maintaining a healthy reserve level, thereby giving markets the confidence that it can handle its external sector contingencies well.
  • EXAM QUESTIONS: (1) Explain the structure of the foreign exchange holdings of the RBI.
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PT's IAS Academy: India’s foreign exchange reserves - an update
India’s foreign exchange reserves - an update
RBI's latest update on forex holdings
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PT's IAS Academy
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