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Data Story : Foreign Exchange Reserves

  • Published
    11th Feb, 2022

Foreign Exchange Reserves are important assets held by the central bank in foreign currencies as reserves. They are commonly used to support the exchange rate and set monetary policy. Most of the reserves are usually held in US dollars, given the currency’s importance in the international financial and trading system. Some central banks keep reserves in Euros, British pounds, Japanese yen or Chinese yuan, in addition to their US dollar reserves. 

India's foreign exchange reserves include:

  • Foreign Currency Assets
  • Gold Reserves
  • Special Drawing Rights (SDR)
  • Reserve position with International Monetary Fund (IMF)

What are the objectives of holding forex reserves?

  • Supporting and maintaining confidence in monetary and exchange rate management policies.
  • Provides for intervention in favour of the national or union currency.
  • Limits external vulnerability by maintaining the foreign currency liquidity to absorb shocks during times of crisis or when borrowing is curtailed.

This data story aims to show comprehensive details of Forex Reserves Of India as of September 2021.

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