Foreign Exchange Reserves : Declined
India’s Forex Reserves recently declined by $1.9 billion to $607.03 billion, its lowest level in nearly 3 months.
- Foreign Exchange Reserves are reserve assets held by a central bank in foreign currencies.
- They are used to back liabilities on their own issued currency, support the exchange rate and set monetary policy.
- These may include foreign currencies, bonds, treasury bills, and other government securities.
- Reserves are denominated and expressed in the US dollar, which is the international numeraire for the purpose.
- RBI is the custodian of the Foreign exchange reserves in India.
- India’s foreign exchange reserves comprise of;
- Foreign currency assets (FCAs): These are maintained in currencies like the US dollar, euro, pound sterling, Australian dollar and Japanese yen.
- Gold
- SDR (Special Drawing Rights): This is the reserve currency with IMF.
- RTP (Reserve Tranche Position): This is the reserve capital with IMF.
- The biggest contributor to India’s Forex reserves is foreign currency assets, followed by gold.
