Foreign Exchange Reserve at the Bay

What is Foreign Exchange Reserve?

Foreign exchange reserves are assets held on reserve by a central bank in foreign currencies. These reserves are used to back liabilities and influence monetary policy.

Forex Market In India

The foreign exchange reserves touched a record high of US $434.6 billion as on October 1.While announcing fourth bi-monthly monetary policy, the RBI Governor Shaktikanta Das said as of October 1 the Forex kitty peaked to the record high. 

Between April and October 1, the country's Forex reserves had increased by US $21.7 billion. FCA(Foreign currency Asset)  increased by US $4.944 billion to US $401.615 billion in the week ended September 27, the RBI said.Expressed in US dollar terms, the foreign currency assets include the effect of appreciation or depreciation of non-US units like the euro, pound and the yen held in the foreign exchange reserves.

The special drawing rights with the International Monetary Fund dipped by US $7 million to US $1.428 billion during the week.The country's reserve position with the Fund also declined by US $17 million to US $3.606 billion, the data showed.

The increase in reserves in the reporting week on account of foreign currency assets (FCA), a major component of the overall reserves.

By Gaurav Singh