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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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Global economy to grow 3.5% in 2017: IMF

The IMF has predicted that the global economy would grow at 3.5% in 2017, up from 3.1 % last year, and 3.6% in 2018. This year’s projection of IMF is marginally higher than what was stated in their last update. The improvement in this year’s projection springs up from good economic news in Europe and Asia, notably from China and Japan. As per IMF, momentum in the global economy has been building up since the middle of the last year making it reaffirm its previous forecasts of higher growth for this year and next year.

However, it has warned that despite these signs of strength, many countries are likely to continue to struggle this year as well. IMF has warned that weather conditions and civil unrest would threaten the low-income countries with mass starvation. Particularly, in Sub-Saharan Africa, IMF expects the income levels to fall slightly. Further, commodity exporters in the Middle East, Africa, and Latin America are likely to struggle with low levels of commodity prices since early 2016.

Way forward

IMF has suggested that policy interventions must address these disparities to ensure the stability of an open, collaborative trading system that benefits all countries. It has called for the need of credible strategies in many countries to place public debt on a sustainable path. It has asked the World to make a renewed multilateral effort to tackle common challenges in an integrated global economy.

IMF

IMF came into existence on December 27, 1945. The IMF works to improve the economies of its member countries. IMF was established to promote international economic cooperation, international trade, employment, and exchange rate stability. It also makes its resources available to member countries to meet the balance of payments needs. Its headquarters is in Washington, D.C.

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IMF opens technical assistance and training centre SARTTAC in New Delhi  

The International Monetary Fund (IMF) has opened a first-of-its-kind South Asia Training and Technical Assistance Centre (SARTTAC) in New Delhi for economic capacity building in South Asia.

It will work to support local member countries of South Asia viz. India, Bangladesh, Bhutan, Maldives, Nepal and Sri Lanka to build human and institutional capacity and implement policies for growth and poverty reduction.

About SARTTAC

  • SARTTAC is financed mainly by its six member South Asia countries (mentioned above) with additional support from Australia, South Korea, European Union and United Kingdom.
  • It strategic goal is to help its member countries strengthen their institutional and human capacity to design and implement macroeconomic and financial policies that promote growth and reduce poverty.
  • It will allow the IMF to meet more of the high demand for technical assistance and training from the region. It is expected to become the focal point for the delivery of IMF capacity development services to South Asia.
Background

In 2016, IMF Managing Director Christine Lagarde and Union Finance Minister Arun Jaitley had signed a Memorandum of Understanding (MOU) to establish a capacity development centre for South Asia. The opening of SARTTAC is part of the MoU and marks a major milestone in the partnership between the IMF and its member countries in the region.

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