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 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
 Year as (31st March) Total forex reserve ($in YOY %
bn) (
2004 113.0 50
Total foreign 2005 141.5 25
reserve of
India from 2006 151.6 7
year 2004 TO 2007 199.2 31
year 2018.
2008 309.7 55
2009 252.0 -19
2010 279.1 11
2011 304.8 9
2012 294.4 -3
2013 292.0 -1
2014 304.2 4
2015 341.6 12
2016 360.2 5
2017 424.8 17.9
2018 405.1 -4.8
 Foreign reserve of INDIA ($ as 0n BN)
450 424.8
405.1
400
360.2
350 341.6
309.7 304.8 304.2
294.4 292
300 279.1
Foreign reserve

252
250
199.2
200
151.6
150 141.5
113
100

50

0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
years

foreign reserve
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)