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Statistics: Foreign exchange reserves fell by $ 1.581 billion from all-time high, gold reserves also decreased

Summary

Foreign exchange reserves are used to pay off liabilities when needed. It consists of foreign currency assets, gold reserves and other reserves in the IMF, of which foreign currency assets hold the largest share after gold.

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Adequate foreign exchange reserves are very important for a healthy economy. It provides much needed help to the economy in times of economic crisis to support imports. The country’s foreign exchange reserves declined by $1.581 billion to $611.149 billion in the week ended July 23, 2021 from an all-time high of $612.730 billion.

hence the fall
According to the data released by the Reserve Bank of India (RBI), it had gained $ 835 million in the week ended July 16, 2021. The decline in foreign exchange assets (FCAs) has led to a decline in foreign exchange reserves. FCA declined by $1.12 billion to $567.628 billion. Foreign currency assets also include the effect of an increase or decrease in the value of other foreign currencies such as the euro, pound and yen held in foreign exchange reserves.

Decrease in gold reserves
During this period, the country’s gold reserves decreased by $ 449 million and reached $ 36884 billion. India’s foreign exchange reserves with the International Monetary Fund (IMF) have declined by $9 million to $5.091 billion.

What is foreign exchange reserves?
Foreign exchange reserves are used to pay off liabilities when needed. It consists of foreign currency assets, gold reserves and other reserves in the IMF, of which foreign currency assets hold the largest share after gold.

advantages of forex reserves
In 1991, the country had to pledge gold to raise money. Then India had to mortgage 47 tonnes of gold with England for just $ 400 million. But at the current level, India has enough reserves to cover imports for more than a year. That is, with this the import expenses of more than one year can be easily met, which is its biggest advantage. A country having good foreign exchange reserves attracts a good share of foreign trade and earns the trust of the trading partners. This may encourage global investors to invest more in the country. The government may also decide to urgently procure essential military goods as there is sufficient foreign exchange available for payment. Additionally, foreign exchange reserves can play an effective role in reducing volatility in the foreign exchange market.

Expansion

Adequate foreign exchange reserves are very important for a healthy economy. It provides much needed help to the economy in times of economic crisis to support imports. The country’s foreign exchange reserves declined by $1.581 billion to $611.149 billion in the week ended July 23, 2021 from an all-time high of $612.730 billion.

hence the fall

According to the data released by the Reserve Bank of India (RBI), it had gained $ 835 million in the week ended July 16, 2021. The decline in foreign exchange assets (FCAs) has led to a decline in foreign exchange reserves. FCA declined by $1.12 billion to $567.628 billion. Foreign currency assets also include the effect of an increase or decrease in the value of other foreign currencies such as the euro, pound and yen held in foreign exchange reserves.

Decrease in gold reserves

During this period, the country’s gold reserves decreased by $ 449 million and reached $ 36884 billion. India’s foreign exchange reserves with the International Monetary Fund (IMF) have declined by $9 million to $5.091 billion.

What is foreign exchange reserves?

Foreign exchange reserves are used to pay off liabilities when needed. It consists of foreign currency assets, gold reserves and other reserves in the IMF, of which foreign currency assets hold the largest share after gold.

advantages of forex reserves

In 1991, the country had to pledge gold to raise money. Then India had to mortgage 47 tonnes of gold with England for just $ 400 million. But at the current level, India has enough reserves to cover imports for more than a year. That is, with this the import expenses of more than one year can be easily met, which is its biggest advantage. A country having good foreign exchange reserves attracts a good share of foreign trade and earns the trust of the trading partners. This may encourage global investors to invest more in the country. The government may also decide to urgently procure essential military goods as there is sufficient foreign exchange available for payment. Additionally, foreign exchange reserves can play an effective role in reducing volatility in the foreign exchange market.

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