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October 19, 2017

Foreign Exchange Reserves

1.1 Foreign Currency Assets: Foreign Currency Assets (FCA) are maintained in major currencies like US dollar, Euro, Pound Sterling, Japanese Yen, etc. However, the Foreign Exchange Reserves are denominated and expressed in US dollar only. The movements in the FCA occur mainly on account of purchase and sale of foreign exchange by the RBI in the foreign exchange market in India, income arising out of the deployment of the foreign exchange reserves, external aid receipts of the Central Government and revaluation of the assets. The Foreign Currency Assets are invested in multi-currency, multi-asset portfolios.

1.2 Gold Reserves: Reserve Bank holds 557.8 tonnes of gold, which is revalued at the end of the month at 90% of the daily average price quoted by London Bullion market Association.

1.3 Special Drawing Right: Special Drawing Right (SDR) is an international reserve asset created by IMF and allocated to its members in proportion of the members’ quota at IMF. SDRs are held by Government of India/RBI and are shown as part of the Foreign Exchange Reserves.

1.4 Reserve Tranche Position: According to the IMF, Reserve Tranche equals the Fund’s holdings of a member’s currency (excluding holdings which reflect the member’s use of Fund credit) that are less than the member’s quota. The reserve tranche is reckoned as part of the member’s external reserves.

 

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