Foreign exchange reserves set a record, know-how profitable India is

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The country's foreign exchange reserves have reached a record all-time high of $ 534.57 billion with strong growth of $ 11.94 billion during the week ended 31 July. This information was given in the latest data of the Reserve Bank of India.

Equivalent to 13.4 months of import expenditure Announcing the monetary policy on Thursday, Reserve Bank of India Governor Shaktikanta Das said that foreign exchange reserves of $ 534.57 billion are equivalent to 13.4 months of import expenditure. He had said that so far (till July 31) in the financial year 2020-21, the reserves have increased by $ 56.8 billion.

Hence the increase Foreign currency reserves had increased by $ 4.993 billion to $ 522.630 billion for the week ended 24 July. Earlier, for the first time in the week ended June 5, the country's foreign exchange reserves had gone above the $ 500 billion levels. The reason for the increase in the country's foreign exchange reserves is the increase in foreign currency assets (FCA) in the week ending 31 July, which forms an important part of the total reserves.

Gold reserves become $ 37.63 billion According to Reserve Bank data, foreign currency assets increased by $ 10.35 billion to $ 490.83 billion in the week under review. According to the Reserve Bank, gold reserves rose by $ 1.53 billion to $ 37.63 billion in the week under review. The Reserve Bank data showed that the special drawing rights in the International Monetary Fund increased by $ 12 million to $ 1.48 billion in the week under review, while the country's reserve reserves in the IMF increased by $ 54 million to $ 4.64 billion.

What is foreign exchange reserves? Foreign exchange reserves are funds or other assets held by the country's central banks, which are used to repay liabilities when needed. Adequate foreign exchange reserves are very important for a healthy economy. It provides much-needed help to the economy in the event of an economic crisis to support imports. This includes foreign currency assets, gold reserves and other reserves in the IMF, of which foreign currency assets hold the largest share after gold.

Four big advantages of foreign exchange reserves In 1991, the country had to mortgage gold to raise money. Then India had to pledge 47 tonnes of gold with England for just $ 400 million. But at current levels, India has enough money reserves to cover imports of more than a year. That is, it can easily meet the import expenditure of more than one year, which is its biggest advantage. A country with a good foreign exchange reserve attracts a good share of foreign trade and earns the trust of trading partners. This may encourage global investors to invest more in the country. The government may decide the immediate purchase of essential military goods because sufficient foreign exchange is available for payment. In addition, foreign exchange reserves can play an effective role to reduce volatility in the foreign exchange market.