The foreign exchange reserves of India are holdings of cash, bank deposits, bonds, and other

financial asset A financial asset is a non-physical asset whose value is derived from a contractual claim, such as deposit (finance), bank deposits, bond (finance), bonds, and participations in companies' share capital. Financial assets are usually more market li ...

s denominated in currencies other than India's national currency, the

Indian rupee The Indian rupee (symbol: ₹; code: INR) is the official currency of India. The rupee is subdivided into 100 '' paise'' (Hindi plural; singular: ''paisa''). The issuance of the currency is controlled by the Reserve Bank of India. The Reserve ...

. The

foreign-exchange reserves Foreign exchange reserves (also called forex reserves or FX reserves) are cash and other reserve assets such as gold and silver held by a central bank or other monetary authority that are primarily available to balance payments of the country, ...

are managed by the

Reserve Bank of India Reserve Bank of India, abbreviated as RBI, is the central bank of the Republic of India, and regulatory body responsible for regulation of the Indian banking system and Indian rupee, Indian currency. Owned by the Ministry of Finance (India), Min ...

(RBI) for the

Indian government The Government of India (ISO: Bhārata Sarakāra, legally the Union Government or Union of India or the Central Government) is the national authority of the Republic of India, located in South Asia, consisting of 36 states and union territor ...

, and the main component is foreign currency assets. Foreign-exchange reserves act as the first line of defense for India in case of economic slowdown, but acquisition of reserves has its own costs. Foreign exchange reserves facilitate external trade and payment and promote orderly development and maintenance of foreign exchange market in India. India's total foreign exchange (forex) reserves stand at around US$704.89 billion on 27 September 2024, with the foreign currency assets (FCA) component at around US$616 billion,

gold reserves A gold reserve is the gold held by a national central bank, intended mainly as a guarantee to redeem promises to pay depositors, note holders (e.g. paper money), or trading peers, during the eras of the gold standard, and also as a store of v ...

at around US$65.7 billion,

special drawing rights Special drawing rights (SDRs, code ) are supplementary foreign exchange reserve assets defined and maintained by the International Monetary Fund (IMF). SDRs are units of account for the IMF, and not a currency ''per se''. They represent a claim ...

(SDRs) with the

International Monetary Fund The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution funded by 191 member countries, with headquarters in Washington, D.C. It is regarded as the global lender of las ...

(IMF) of around US$18.547 billion and around US$4.3 billion reserve position in the IMF, as per the RBI's weekly statistical supplement published on 08 September 2023. The

Economic Survey of India The Economic Survey of India is an annual document of the Ministry of Finance, Government of India. The Department of Economic Affairs, Ministry of Finance presents the Survey in the Parliament every year, just before the Union Budget. It is p ...

in 2014-15 stated India could target foreign exchange reserves of US$750 billion-US$1 Trillion. India's foreign exchange reserves are mainly composed of the

United States Dollar The United States dollar (Currency symbol, symbol: Dollar sign, $; ISO 4217, currency code: USD) is the official currency of the United States and International use of the U.S. dollar, several other countries. The Coinage Act of 1792 introdu ...

in the forms of United States

government bonds A government bond or sovereign bond is a form of bond issued by a government to support public spending. It generally includes a commitment to pay periodic interest, called coupon payments'','' and to repay the face value on the maturity da ...

and institutional bonds. with nearly 7.34% of forex reserves in gold. The FCAs also include investments in United States Treasury bonds, bonds of other selected governments and deposits with foreign central and

commercial Commercial may refer to: * (adjective for) commerce, a system of voluntary exchange of products and services ** (adjective for) trade, the trading of something of economic value such as goods, services, information or money * a dose of advertising ...

banks. As of September 2021, India holds fourth largest foreign-exchange reserves in the world after

China China, officially the People's Republic of China (PRC), is a country in East Asia. With population of China, a population exceeding 1.4 billion, it is the list of countries by population (United Nations), second-most populous country after ...

Japan Japan is an island country in East Asia. Located in the Pacific Ocean off the northeast coast of the Asia, Asian mainland, it is bordered on the west by the Sea of Japan and extends from the Sea of Okhotsk in the north to the East China Sea ...

, and

Switzerland Switzerland, officially the Swiss Confederation, is a landlocked country located in west-central Europe. It is bordered by Italy to the south, France to the west, Germany to the north, and Austria and Liechtenstein to the east. Switzerland ...

Composition

The

Act and the Foreign Exchange Management Act, 1999 set the legal provisions for governing the foreign exchange reserves. The Reserve Bank of India (RBI) accumulates foreign currency reserves by purchasing from authorized dealers in open market operations. Foreign exchange reserves of India act as a cushion against rupee volatility once global interest rates start rising. The Foreign Exchange Reserves of India consists of below four categories; # Foreign Currency Assets - Total FCA till March 2021 was $536.69 billion out of which $359.87 billion is invested in overseas securities, $153.39 billion is deposited with other central banks and $23.42 (4.36 percent of total FCA) billion is deposited with overseas commercial banks. #

Gold Gold is a chemical element; it has chemical symbol Au (from Latin ) and atomic number 79. In its pure form, it is a brightness, bright, slightly orange-yellow, dense, soft, malleable, and ductile metal. Chemically, gold is a transition metal ...

- As of March 2021, the RBI held 695.31 metric tonnes of gold. 403.01 metric tonnes of which is in custody of

Bank of England The Bank of England is the central bank of the United Kingdom and the model on which most modern central banks have been based. Established in 1694 to act as the Kingdom of England, English Government's banker and debt manager, and still one ...

and

Bank for International Settlements The Bank for International Settlements (BIS) is an international financial institution which is owned by member central banks. Its primary goal is to foster international monetary and financial cooperation while serving as a bank for central bank ...

. 292.30 tonnes of gold is held domestically. #

Special Drawing Rights Special drawing rights (SDRs, code ) are supplementary foreign exchange reserve assets defined and maintained by the International Monetary Fund (IMF). SDRs are units of account for the IMF, and not a currency ''per se''. They represent a claim ...

(SDRs) #

Reserve Tranche Position A country's Reserve Tranche Position (RTP) is the difference between the International Monetary Fund's (IMF) holdings of that country's currency and the country's IMF-designated quota. Background The primary means of financing the International ...

Statistics

*In 1960, forex reserves covered just 8.6 weeks of imports *In 1980, India had foreign exchange reserves of over US$7 billion, more than double the level (U$2.55 billion) of what

had at that time. *In 1990, forex reserves covered just 4.8 weeks of imports * Foreign exchange reserves of India reached milestone of $100 billion mark only in 2004. * India was forced to sell dollars to the extent of close to US$35 billion in the spot markets in Financial Year 2009 due to 22% depreciation in rupee (against the dollar) in the same fiscal year 2009. * In 2009, India purchased 200 tonnes of gold from the

, worth US$6.7bn (€4.57bn, £4.10bn). * In June 2020, India's foreign exchange reserves crossed the US$500 billion mark for the first time. * In June 2021, India's foreign exchange reserves crossed the US$600 billion mark for the first time. * India's total forex reserves touched an all-time high of US$642.453 billion on 8 September 2021. The reserves declined to $598.89 billion by 8 September 2023 & rose to hit a fresh all time high of $642.63 in March 2024. * India's total forex reserves touched an all-time high of US$704.89 billion on 27 September 2024.

References

External links

IMF - India

Reserve Bank of India
{{Economy of India Finance in India Foreign exchange reserves

Composition

Statistics

See also

References

External links