{"id":86602,"date":"2020-09-09T13:52:15","date_gmt":"2020-09-09T08:22:15","guid":{"rendered":"https:\/\/factly.forumias.com\/?p=17350"},"modified":"2020-09-09T13:52:15","modified_gmt":"2020-09-09T08:22:15","slug":"explained-forex-reserves-at-all-time-high-why-did-this-happen-and-what-does-it-mean-for-indias-economy","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/explained-forex-reserves-at-all-time-high-why-did-this-happen-and-what-does-it-mean-for-indias-economy\/","title":{"rendered":"Explained: Forex reserves at all-time high \u2014 why did this happen, and what does it mean for India\u2019s economy?"},"content":{"rendered":"\n<p><strong>News:<\/strong> As per the Reserve Bank of India (RBI) data, India&#8217;s foreign exchange (forex) reserves has touched a record high of USD 541.431 billion in the week ended 28th August 2020.<\/p>\n\n\n\n<p><strong>Facts:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Reasons for High Foreign Reserves:<\/strong><ul><li><strong>Investment: <\/strong>Rise in investment by foreign portfolio investors and increased foreign direct investments(FDIs).<\/li><li><strong>Fall in Crude Oil Prices: <\/strong>Fall in crude oil prices has brought down the oil import bill, saving precious foreign exchange. Similarly, overseas remittances and foreign travels have also fallen steeply.<\/li><\/ul><\/li><\/ul>\n\n\n\n<p><strong>Additional Facts:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Foreign exchange reserves<\/strong>: These are assets denominated in a foreign currency that are held on reserve by a central bank.These may include foreign currencies, bonds, treasury bills and other government securities.<\/li><li><strong>Components of Foreign exchange reserves: <\/strong>The Foreign exchange reserves of India consists of four categories which are: Gold , SDRs (special drawing rights of IMF), Foreign currency assets (capital inflows to the capital markets, Foreign Direct Investment and external commercial borrowings) and Reserve Position with IMF.<\/li><li><strong>Forex Reserves Storage: <\/strong>The RBI Act,1934 provides a legal framework for deployment of reserves in different foreign currency assets and gold within the broad parameters of currencies, instruments and issuers.<\/li><li><strong>Significance of Forex Reserves:<\/strong><ul><li><strong>Comfortable Position to Government: <\/strong>The rising forex reserves give comfort to the government and the RBI in managing India\u2019s external and internal financial issues at a time of major contraction in economic growth.<\/li><li><strong>Managing BoP Crisis:<\/strong> It serves as a cushion in the event of a Balance of Payment (BoP) crisis on the economic front.It is enough to cover the import bill of the country for a year.<\/li><li><strong>External Debt Obligations: <\/strong>Assist the government in meeting its foreign exchange needs and external debt obligations.<\/li><li><strong>Strengthening of Rupee: <\/strong>The rising reserves have helped the rupee to strengthen against the dollar.The foreign exchange reserves to GDP ratio is around 15 per cent.<\/li><li><strong>Confidence in Market: <\/strong>Reserves will provide a level of confidence to markets and investors that a country can meet its external obligations.<\/li><\/ul><\/li><\/ul>\n","protected":false},"excerpt":{"rendered":"<p>News: As per the Reserve Bank of India (RBI) data, India&#8217;s foreign exchange (forex) reserves has touched a record high of USD 541.431 billion in the week ended 28th August 2020. Facts: Reasons for High Foreign Reserves: Investment: Rise in investment by foreign portfolio investors and increased foreign direct investments(FDIs). Fall in Crude Oil Prices:&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/explained-forex-reserves-at-all-time-high-why-did-this-happen-and-what-does-it-mean-for-indias-economy\/\">Continue reading <span class=\"screen-reader-text\">Explained: Forex reserves at all-time high \u2014 why did this happen, and what does it mean for India\u2019s economy?<\/span><\/a><\/p>\n","protected":false},"author":61,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[3127],"tags":[3435],"class_list":["post-86602","post","type-post","status-publish","format-standard","hentry","category-economy","tag-forex-reserves","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1700531911},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/86602","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/61"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=86602"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/86602\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=86602"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=86602"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=86602"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}