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Forex Reserves

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).