India’s Forex reserves at US$ 501.703 billion

News Desk

In what could be said as highest ever India’s total foreign exchange (Forex) reserves was standing at around US$ 501.703 billion.

Foreign exchange assets (FCA) component at around US$463.630 billion, gold reserves at around US$32.352billion, SDRs (Special Drawing Rights with the IMF) of around US$1.442 billion and around US$4.278 billion reserve position, as per Reserve Bank of India’s (RBI) weekly statistical supplement.

India could now target foreign exchange reserves of US$750 billion-US$1 trillion. The reserves rose to $ 501.7 billion, marking an increase of $ 8.22 billion in a week. Reserves had surged $3.43 billion to a fresh all-time high of $493.48 billion, in the week-ended May 29.

Earlier, in February Foreign exchange reserves in India increased for the 22nd straight week to an all-time high of USD 476.12 billion in the week ended February 21 from INR 476.09 billion in the previous week. Gold reserves increased to USD 29.66 billion from USD 29.12 billion.

What does this means?

Forex reserves, if adequate, are key for a healthy economy. It gives the much needed cushion to the economy in the event of an economic crisis. India, in 1991, had to pledge gold to raise money. At the current level, India has enough reserves to cover imports for over a year.

Forex reserves consist of foreign currency assets, gold reserves, special drawing rights and reserves in IMF. Of these, foreign currency assets are the biggest component followed by gold.

RBI Act and the Foreign Exchange Management Act, 1999 set the legal provisions for governing the foreign exchange reserves. RBI accumulates foreign currency reserves by purchasing from authorized dealers in open market operations.