An Analysis of Foreign Exchange

Reserves in India since 2001-2018

INTRODUCTION
In simplest terms foreign exchange reserves are the foreign
currencies which are held by the central bank to support liabilities on
the issued currency and also a way to influence the monetary
policies of the country.
Regardless of the size of the economy almost all countries in the
economy hold significant foreign exchange reserves and most of
them being held in U.S dollars which is the most traded currency.
Countries who wish to have fixed exchange rate uses forex reserves
as a tool of monetary policy.
 Components of Foreign
Exchange Reserve

• The SDR is an international reserve asset, created by the IMF in 1969

Special • to supplement its member countries’ official reserves.
Drawing
Rights

• Gold played a central role in the international monetary system until the
collapse of the Bretton Woods system of fixed exchange rates in 1973
Gold
Reserves

• It is the component of a country’s quota with the IMF that in the form of
Reserve gold or foreign currency
Tranche
Position
 Components of Foreign Exchange Reserve

• The SDR is an international reserve asset, created by the IMF in 1969

Special Drawing Rights • to supplement its member countries’ official reserves.

• Gold played a central role in the international monetary system until the
Gold Reserves collapse of the Bretton Woods system of fixed exchange rates in 1973

Reserve Tranche • It is the component of a country’s quota with the IMF that in the form of
Position gold or foreign currency

Foreign currency asset

 RESEARCH METHODOLOGY

• Data for the study is collected from secondary sources.

• The study is based on published sources of data collected from
Sources of data journals , websites like www.rbi.org.in, Central Statistical
Organization (CSO) etc..

• The data for this study was collected from the time period 2001
Period of study to 2018

Statistical Analysis of • Foreign currency reserves are crucial to a nation’s economic

Trends in Forex Reserves welfare. Without sufficient reserves, an economic can crush to
in India a halt
Ranking of countries according to their
forex reserves holding
Foreign Currency Reserves (in billions of
Rank Country U.S. dollars)

1 China $3,210.0
2 Japan $1,259.3
3 Switzerland $804.3
4 Saudi Arabia $501.3
5 Russia $460.6
6 Taiwan $459.9
7 Hong Kong $424.8
8 India $403.7
9 South Korea $402.4
10 Brazil $379.4
Ranking of countries according to their forex
reserves holding (Excluding Gold Reserve)
Foreign Currency Reserves (in millions of U.S.
Rank Country dollars, $)
1 China 30,53,100
2 Japan 12,52,870
3 Switzerland 7,37,806
4 Saudi Arabia 4,87,259
5 Russia 4,63,800
6 Taiwan 4,61,784
7 Hong Kong 4,23,100
8 South Korea 4,02,500
9 India 3,94,465
10 Brazil 3,80,679
Reasons behind the surge in India’s Forex
Reserves

Narrowing
Narrowing
Favourable BOP Current
trade deficit
Account Deficit

Rise in capital Low credit

flows take-off
 Conclusion
• The analysis of the data reveals that foreign exchange reserves have significantly changed
over the years
• Total reserves have increased from 2001 billion to 29034 billion in 2018, which shows an
increase of 93.11 %.
• Foreign currency stands at 27218 billion with a percentage share of 93.75%, which shows
that it is foreign currency reserves that are backing our foreign exchange reserves

Component Contribution (%) 2018

Gold 5.27
SDR 0.62
Reserve tranche position 0.37
Foreign currency asset 93.75
THANK YOU
Shubhangini Parmar (26)
Simran Saluja (27)
Sneha Hude (28)
Saumya Singh (29)
Soumika Mitra (30)
Vaishnavi Nachan (31)