India’s Foreign Exchange Reserves 2024 – Update

India’s foreign exchange reserves are crucial for economic stability. On November 15, they stood at $657.89 billion which includes $65.75 billion in gold. The reserves had previously reached $675.65 billion on November 8. A decline of $17.7 billion occurred due to the Reserve Bank of India (RBI) selling dollars to stabilize the rupee.

Special Drawing Rights (SDR)

The SDR portion of India’s reserves is $18.06 billion. SDRs are international reserve assets created by the International Monetary Fund (IMF). They provide liquidity to the global economy. SDRs can be exchanged among member countries.

This financial year, India’s reserves have increased by $11.5 billion. In September, reserves peaked at $704.885 billion. This was a record high. India ranks fourth globally in foreign exchange reserves, following China, Japan, and Switzerland.

Role of the Reserve Bank of India (RBI)

The RBI manages the foreign exchange reserves, which intervenes to manage the rupee’s value. When foreign investors withdraw funds, the RBI sells dollars to prevent a sharp decline. This stabilisation is essential for economic confidence.

Foreign exchange reserves are vital for economic health. They provide a buffer against external shocks. High reserves enhance investor confidence. They also ensure that the country can meet its international payment obligations.

Important Facts for Exams:

1. Special Drawing Rights (SDR): SDRs are international reserve assets created by the IMF. They provide liquidity to the global economy and can be exchanged among member countries for currencies.
2. Foreign Exchange Reserves: Foreign exchange reserves are crucial for economic stability. They provide a buffer against external shocks and enhance investor confidence in a country’s economy.
3. Reserve Bank of India (RBI): The RBI manages India’s foreign exchange reserves. It intervenes to stabilise the rupee when foreign investors withdraw funds, ensuring economic confidence and stability.

Month: Current Affairs - November, 2024

Category: Economy & Banking Current Affairs