Forex Reserves:
Reserve Bank of India (RBI), India’s forex reserves have fallen by USD 110 billion in the last 13 months.
Current Scenario:
- India’s forex reserves have fallen by USD 110 billion since September 2021 where it stood at a record high of USD 642.45 billion.
- It needs to be noted that Indian rupee is a freely floating currency, and its exchange rate is market determined. The RBI does not have any fixed exchange rate.
- Despite this drastic decline, India has been faring much better than several reserve currencies, EMEs (emerging market economies) and its Asian peers.
Forex reserves :
- Are assets held on reserve by a central bank in foreign currencies, which can include bonds, treasury bills and other government securities.
- Most foreign exchange reserves are held in US dollars.
- Components:
- Foreign Currency Assets
- Gold reserves
- Special Drawing Rights
- Reserve position with the International Monetary Fund (IMF).
