Foreign Exchange Reserve

In context of India, Foreign Exchange Reserves include:

  • Foreign currency assets (FCAs)
  • Gold
  • Special Drawing Rights (SDRs)
  • RBI’s Reserve position with International Monetary Fund (IMF)

FCAs constitute the largest component of the Forex Reserves. FCAs consist of US dollar and other major non-US global currencies. It also comprises of investments in US Treasury bonds, bonds of other selected governments, deposits with foreign central and commercial banks.

Movement in FCA occur mainly on account of purchase and sale of foreign exchange by RBI, income arising out of deployment of Forex reserves, external aid receipts of government and revaluation of assets.

SDR is an international reserve asset created by IMF and allocated to its members in proportion of their quota at IMF.

  • The gold reserves stand at ~$21.484 billion.
  • SDRs’ value has increased from $5 million to ~$1.534 billion.
  • RBI’s reserve position with the IMF stands to $2.070 billion

FCA > Gold > RBI with IMF > SDR