Forex reserves are assets held on reserve by a central bank (RBI) in foreign currencies like the dollar, which can include bonds, treasury bills, and other government securities.

Need To Know

  • They are an important component of the Balance of Payments (BoP)
  • Components of India’s Forex Reserves
    • Foreign Currency Assets (FCA) (largest contributor) 
    • Gold reserves (second largest contributor) 
    • Special Drawing Rights: It is not a currency, but its value is determined by a basket of 5 major currencies: the US dollar, euro, Chinese renminbi, Japanese yen, and British pound sterling. 
    • Reserve Tranche Position (RTP) with the IMF: RTP is a country’s quota-based access to IMF resources, available for borrowing without strict conditions, used for BoPs or financial stability.
How much forex reserve does India have?

  • Foreign Currency Assets: about US$564.68 billion
  • Gold Reserves: about US$104.74 billion
  • Special Drawing Rights (SDRs): approximately US$18.65 billion
  • Reserve position with the IMF: approximately US$4.80 billion

 

Source: The Hindu

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