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India’s Forex Reserves reach Life Time High of $381.167 billion

According to RBI, India’s foreign exchange (Forex) reserves have increased by $2.404 billion to touch a lifetime high of $381.167 billion in the week that ended on June 2. The increase was due to increase in foreign currency assets (FCAs).

Components

The components of India’s Foreign Exchange Reserves include: Foreign currency assets (FCAs), Gold, Special Drawing Rights (SDRs) and RBI’s Reserve position with International Monetary Fund (IMF).

Out of all the components, FCAs constitute the largest component of the Forex Reserves.

FCA rose by $2.748 billion to $357.290 billion in the reporting week. 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. FCAs include with them the effects of appreciation or depreciation of non-US currencies like the euro, pound, and the yen and is expressed in terms of dollars.

The gold reserves declined by $343.2 million to $20.095 billion in the reporting week.

SDRs’ value decreased marginally by $0.2 million to $1.472 billion.

RBI’s reserve position with the IMF declined by $0.4 million to $2.309 billion.

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IMF: India will Grow at 7.7% in 2018-19

The International Monetary Fund in its regional economic outlook has predicted the growth rate of India as 7.2% in the 2017-18 fiscal and 7.7% in 2018-19 fiscal. The report has stated that the disruptions caused by the demonetisation would be offset by a favorable monsoon and continued progress in resolving supply-side bottlenecks. However, it has predicted the investment recovery to remain modest and uneven across sectors. Though weaknesses in bank and corporate balance sheets is likely to affect the near term credit growth, the report cites confidence and policy credibility gains and continued fiscal consolidation and anti-inflationary monetary policy to be the factors that underpin macroeconomic stability.

According to the report, IMF has recommended the removal of long-standing structural bottlenecks to enhance market efficiency. The report has revised the growth downward in India due to effects from the currency exchange initiative and in South Korea due to political uncertainty.

According to the report, improving agricultural productivity in the labour-intensive agricultural sector remains a key challenge. It has said that much more needs to be done to address structural bottlenecks and improve market efficiency. Liberalising commodity markets as per the report will help in infusing more flexibility in the distribution and marketing of farm produce and will enhance the competitiveness, efficiency, and transparency in state agriculture markets. IMF has said that input subsidies to farmers should be administered through direct cash transfers as underpricing of agricultural inputs would have large negative impacts on agricultural output.

IMF

International Monetary Fund (IMF) was established on December 27, 1945 with stated objectives to promote international economic cooperation, international trade, employment, and exchange rate stability, including by making resources available to member countries to meet balance of payments needs. Its headquarters are in Washington, D.C. The IMF works to improve the economies of its member countries.

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India’s Forex reserves increase by $1.25 billion

According to the Reserve Bank of India’s weekly statistical supplement, India’s foreign exchange (Forex) reserves have increased by $1.25 billion to reach $371.13 billion from $369.88 billion as on April 21, 2017. The current reserves are just short of a lifetime high of USD 371.99 billion reached in the week to September 30, 2016.

Components

The components of India’s 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. It was augmented by $1.23 billion to $347.48 billion as on April 21, 2017. 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.

The gold reserves stand at $19.86 billion.

SDRs’ value has increased $5 million to $1.45 billion.

RBI’s reserve position with the IMF stands to $2.33 billion.

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