IMF: Hard currency growth in India’s forex reserves limited to just $4 billion in FY12

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India added $ 47.5 billion to this foreign exchange reserves Last fiscal year, down almost half of the previous year. But a drill down of the data shows that about $26 billion of those incremental reserves were due for approval. special Drawing Rights From International Monetary Fund and revaluation of gold reserves. Only $4 billion worth of hard foreign currency assets were added to the forex kitty.

An additional $17.7 billion in reserves was provided by the IMF SDR The allocation and the increase in the value of gold by about $ 9 billion. Even excluding the SDR gain—which is a one-time ($17.4 billion) and an $8.67 billion change in gold, the gain in foreign currency assets is $20bn.

After a valuation deficit of $17.2 billion, foreign exchange reserves increased by $30.3 billion during 2021-22 as compared to $99.2 billion during 2020-21, according to data released on variation in forex reserves. reserve Bank of India,



data analysis in reserve Bank of IndiaHalf-Yearly Report on Management of Foreign Exchange Reserves, $607.3 billion in addition to $30.3 billion of additional reserves in FY22, only $4 billion in reserves for hard currencies, $8.7 billion on account of revaluation in gold and an increase in SDRs $17.4 billion.

foreign currency

“So one way to interpret the relative moving parts is to see that gold reserves increased, so there was a positive valuation effect, but then the FCA related valuation loss due to the weaker EUR, JPY and GBP was much more than $17bn. over the past 12 months,” said Rahul Bajoria, chief economist for India at Barclays Capital.

The movement in foreign currency assets is mainly due to the purchase and sale of foreign exchange by the Reserve Bank of India, income arising from the deployment of foreign exchange reserves, external aid receipts from the central government and changes due to revaluation of assets.

The data indicates that without IMF support, our outer region is strained. “The balance of payments is under pressure due to the current account deficit turning into a deficit,” said Madan Sabnavis, Chief Economist of India. FDI has maintained its position while FPI is negative. So the external account has become weak.

The slump in reserves assumes significance as foreign investment is slowing as central banks of advanced economies raise rates to fight rising inflation and the prospect of a wider current account deficit will further put pressure on reserves and the rupee. It is estimated that the current account deficit may exceed 3.0% of GDP in FY 2013 or even more than 1.2% in FY 2012. The fall in CAD is likely due to higher commodity prices (crude oil prices are expected to average $105 a barrel in FY23) and slowdown in global growth. The impact of the global growth slowdown may have an impact on exports. development and service receipts. On the other hand, we expect the transfer in FY23,” said a report by

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