India's forex reserves rise by over $1.2 billion | Zee

Forex Reserves – India must now put its massive forex reserves to better use

forex reserves
During the week, India’s forex reserves crossed the psychological $500 billion mark. India has come a long way from having just 15 days of imports as forex reserves in 1991 when she had to pledge gold to the Bank of England. Now there is a problem of plenty!
Forex reserves ranking
For the first time since the forex chest began to be recorded, India entered the top-5 in terms of forex reserves. India ranks behind China, Japan, Switzerland and Russia and has overtaken Taiwan, Hong Kong and Saudi Arabia. KSA, at one point of time held over $750 billion in its forex reserves but 5 years of weak oil prices meant that Saudi Arabia has been forced to draw heavily on its forex reserves despite cutting down on many of its welfare outlays. India can hope to overtake Russia soon. China leads the rankings with $3.5 trillion in reserves.
Why are reserves building up?
There are multiple reasons why the forex reserves are building up. Firstly, the sharp fall in oil import bill has brought down the trade deficit by more than 50% on a monthly basis. Secondly, the forex remittances from NRIs have been extremely robust with most of the world markets offering either zero or negative rates of returns. Lastly, RBI intervention in the forex markets has reduced substantially and that has also helped forex reserves build-up.
Know more: http://blog.tradeplusonline.com/stock-market-updates/forex-reserves-india-must-now-put-its-massive-forex-reserves-to-better-use/
submitted by Tradeplusonline01 to stackexchange [link] [comments]

First Time in Indian History Forex reserves touched $500 billion mark. Today India overtook Russia & Korea to become 3rd largest forex reserve holder after China and Japan as the robust foreign funds inflow amid a raging Pandemic drives the country towards a momentous Landmark.

First Time in Indian History Forex reserves touched $500 billion mark. Today India overtook Russia & Korea to become 3rd largest forex reserve holder after China and Japan as the robust foreign funds inflow amid a raging Pandemic drives the country towards a momentous Landmark. submitted by BigSurround2 to IndiaSpeaks [link] [comments]

Amid covid crisis, India's forex reserves surge to all-time high of US$ 493.48 billion

Amid covid crisis, India's forex reserves surge to all-time high of US$ 493.48 billion submitted by nietscheinsaan to india [link] [comments]

ELI5ed version of India's Currency Crisis.

Alright people, here it is, I am now going to try and explain the whole rupee fall phenomenon as simply as I can. We're going to first try and discuss the concepts involved here and then look at what our policy makers have done. Here's hoping that you last till the end cause it was quite a lot of effort.
Why am I doing this?
I am tired of all the lame rupee fall jokes that flooded my WhatsApp last week. I am tired of all the people telling the government to 'Make it stop!' (Spoiler: It's not that simple). Also, I am going to get out in the job market soon and am too lazy to brush up my basics in a formal way. The prospect of educating fellow redditors makes it worth the effort.
Why should you read all of this?
Because you care and by the end of this, hopefully, you'll be able to talk about this in a smarter way which will potentially improve your chances with that girl.
It is likely that you may already know the answers to some of the questions here. Go right ahead and skip them because I am trying to do an ELI5 here.
Let's take it from the top.
What is a foreign exchange rate?
It is the rate at which one currency will be exchanged with another.
Why do foreign exchange rates exist?
Simply because the currency of one country will not be accepted in another. We have a lot of countries and we have a lot of currencies and judging by the feeds on facebook, people travel a lot.
Fun fact#1: The US dollar and the Euro account for approximately 50 percent of all currency exchange transactions in the world. Adding British pounds, Canadian dollars, Australian dollars, and Japanese yen to the list accounts for over 80 percent of currency exchanges altogether.
Who or what decides the exchange rate between two currencies?
On a fundamental level, The value of currency, like the price of any other good or service, depends on its demand and supply. And demand for a currency, say, the US dollar, typically comes from Indian importers, people or institutions that invest in the US and travellers to the US. All these agents require dollars for transacting in the US.
Analogously, exporters to the US, travellers to India and investor inflows supply US dollars in return for rupees to transact in India. If the demand for the rupee decreases compared to, say, the US dollar, the value of the rupee goes down, and vice-versa
So, it's all driven by market (buyers and sellers) forces?
No, There are other factors too. But we'll take them up when we're discussing the Indian context.
What role does something like RBI do in all this?
To understand this, we're going to dive into a little bit of theory. Broadly speaking, there are two ways of handling your currency's exchange rate:
A. The Floating Exchange Rate: The market determines a floating exchange rate. In other words, a currency is worth whatever buyers are willing to pay for it. This is determined by supply and demand, which is in turn driven by foreign investment, import/export ratios, inflation, and a host of other economic factors. Generally, countries with mature, stable economic markets will use a floating system. Virtually every major nation uses this system. Floating exchange rates are considered more efficient, because the market will automatically correct the rate to reflect inflation and other economic forces.
The floating system isn't perfect, though. If a country's economy suffers from instability, a floating system will discourage investment. Investors could fall victim to wild swings in the exchange rates, as well as disastrous inflation.
Did that previous paragraph ring a bell? Interestingly though, we don't follow a floating rate system.
Fun fact#2: Canada is the only country whose currency's value is determined absolutely and entirely by the foreign exchange market or as we just learned, by means of a 'floating exchange rate'. Their Central Bank has never intervened in years.
B. The Fixed or Pegged Exchange Rate: A pegged, or fixed system, is one in which the exchange rate is set and artificially maintained by the government. The rate will be pegged to some other country's dollar, usually the U.S. dollar. The rate will not fluctuate from day to day. You decree that 1 US Dollar will always be equal to 35 Rupees and that is it. Countries that have potentially unstable economies usually use a pegged system. Developing nations can use this system to prevent out-of control-inflation.
And now your thinking:
Holy shit! We can do that? Why aren't we doing that? Why don't we get our currency pegged as seen in the Fixed or Pegged Exchange Rate system?
For starters, the system can backfire. If the real world market value of the currency is not reflected by the pegged rate, a black market may spring up, where the currency will be traded at its market value, disregarding the government's peg. When people realize that their currency isn't worth as much as the pegged rate indicates, they may rush to exchange their money for other, more stable currencies. This can lead to economic disaster, since the sudden flood of currency in world markets drives the exchange rate very low. So if a country doesn't take good care of their pegged rate, they may find themselves with worthless currency.
To further explain, assume that the demand for US dollar increases. Consequently, its value increases, such that each dollar can now buy 10 rupees instead of 4 previously. To offset such an increase, the RBI pumps in sufficient amount of dollars into the market to meet the increased demand. This process ensures that the value of the dollar is restored to its original one. The central bank can supply and draw dollars from forex reserves, which is its official kitty.
Well, the problem is, we ain't got much forex reserves.
India’s forex reserves, which stand at $270 billion(As of the end of August, 2013) approximately, cannot defend the falling rupee eternally. To make sense out of that figure, let us assume that one bad day, all foreign investors in our country decide to take back their money (which is extremely unlikely). In that dire situation, the RBI would have to borrow to a tune of $215 million to pay them all back.
To make matters worse, the increasing oil imports and falling export share in the recent months have contributed significantly towards draining (the already concerning levels of) our forex reserves. The arguments above indicate that the RBI does not have sufficient cushion to strictly adhere to a fixed rate regime.
In fact, forex reserves are the only major 'reactionary tool' we have to prevent any speculation based downfall in the value of rupee.
So if Forex reserves are so damn important, why haven't we been building them up?
Actually, we have been trying to. Refer this graph. If you do a simple forex reserves News based search on Google, you'll find that the last month has seen a lot of ups and downs in it implying that the RBI is scrambling to plug the hole by raising and spending these reserves. But it's still not good enough.
But but...that is a good graph, why is it not good enough?
Enter Mr. CAD, the media's favourite buzzword
At the end of 2007, the Current Account Deficit(Mr. CAD) of India stood at $8 billion. If you refer the above graph, you'll notice that we had a forex reserve of around 300 billion by that time. That means our forex reserves were 37.5 times the CAD. For 2013, the current account deficit is at $90 billion whereas the foreign exchange reserves are down to around $270 billion. That's just around 3 times that of the CAD. That is an alarming fall.
What is a Current Account Deficit?
Occurs when a country's total imports of goods, services and transfers is greater than the country's total export of goods, services and transfers. This situation makes a country a net debtor to the rest of the world. So, evidently, it has an impact with your foreign exchange rates. A substantial current account deficit is not necessarily a bad thing for certain countries. Developing countries may run a current account deficit in the short term to increase local productivity and exports in the future.
Why is our Current Account Deficit so bad?
Simply because we get a lot of our stuff from the outside. The most significantly burdensome items that we import are Gold and Oil. The two of them together constitute almost 50% of our total imports!
Gold
No kidding, we Indians love the yellow metal. We are in fact the largest consumer of Gold in the world. No seriously, our country is single handedly responsible for upto 20% consumption of the worldwide gold consumption. It makes sense to us because not only can we show it off at social events, we can also readily sell it later. In effect, it's like a Saving from the perspective of the mango people. Most Indians are blithely unaware that gold is not locally sourced but actually imported from countries such as Switzerland and the United Arab Emirates.
Which is why we had Mr. Chidambaram 'appealing' to us. But nobody's going to listen to your appeals, Sir. My own financial security will always be more important than your CAD-MAD bullshit. Which is why we have steadily increased the import tariffs on Gold imports in an attempt to discourage gold consumption. Not very effective but it's something.
Make no mistake though, although it will be 'nice' to have people buy less gold this season, in the long run, it will save yo ass.
Fun Fact#3: "I have never bought gold at any point of time in my life. I don’t wear any jewelry — be it a ring or a chain, For me gold is just another metal, it just shines a little bit more.” - P. Chidambaram, Finance Minister of India - A country which is the largest consumer of Gold.
Contd as Comment Below Due to Character Restrictions. Continue Reading at 'Oil'
submitted by PlsDontBraidMyBeard to IndiaInvestments [link] [comments]

India’s Forex Reserves Surge Past $500 Billion

India’s Forex Reserves Surge Past $500 Billion submitted by passingby_reddit to unitedstatesofindia [link] [comments]

First Time in Indian History Forex reserves touched $500 billion mark. Today India overtook Russia & Korea to become 3rd largest forex reserve holder after China and Japan as the robust foreign funds inflow amid a raging Pandemic drives the country towards a momentous Landmark.

First Time in Indian History Forex reserves touched $500 billion mark. Today India overtook Russia & Korea to become 3rd largest forex reserve holder after China and Japan as the robust foreign funds inflow amid a raging Pandemic drives the country towards a momentous Landmark. submitted by BigSurround2 to indianews [link] [comments]

[Business] - Forex reserves hit fresh all-time high, touch $513.25 billion | Times of India

[Business] - Forex reserves hit fresh all-time high, touch $513.25 billion | Times of India submitted by AutoNewspaperAdmin to AutoNewspaper [link] [comments]

Sri Lanka seeks USD 1.1 billion currency swap facility from India amidst depleting forex reserves

submitted by aguyfrominternet to worldnews [link] [comments]

India's forex reserves surge $3.09 billion to $479.57 billion in a week.

submitted by SumoneSumwere to india [link] [comments]

India’s Forex Reserves Surge Past $500 Billion

India’s Forex Reserves Surge Past $500 Billion submitted by passingby_reddit to india [link] [comments]

#BREAKING: India's forex reserves jump by $8.22 billion to reach record half-a-trillion mark.

#BREAKING: India's forex reserves jump by $8.22 billion to reach record half-a-trillion mark. submitted by Busy_Art to IndiaSpeaks [link] [comments]

Facing an unprecedented crisis, India has ratcheted up its forex reserves like never before

submitted by _j-sun_ to Economics [link] [comments]

India's forex reserves cross $500 billion mark

India's forex reserves cross $500 billion mark submitted by BurkhaDuttSays to indianews [link] [comments]

#BREAKING: India's forex reserves jump by $8.22 billion to reach record half-a-trillion mark.

#BREAKING: India's forex reserves jump by $8.22 billion to reach record half-a-trillion mark. submitted by Busy_Art to indianews [link] [comments]

India's forex Reserves - $501.7 billion அதிகரிப்பு ?| TTZ

India's forex Reserves - $501.7 billion அதிகரிப்பு ?| TTZ submitted by Tamiltraderszone to u/Tamiltraderszone [link] [comments]

Facing an unprecedented crisis, India has ratcheted up its forex reserves like never before

This is the best tl;dr I could make, original reduced by 69%. (I'm a bot)
The country's foreign exchange reserves are at an all-time high of over $500 billion, according to data released by India's central bank on June 12.The strong forex pool provides stability in today's grim economic conditions.
The rise of forexThe reasons behind the swelling forex reserves are India's shrinking import bill, an increase in foreign direct investments, improved inflows from foreign portfolio investors into the stock and debt markets, and the Reserve Bank of India's buying spree.
"These assets, which are in other foreign currencies, are appreciating against the dollar and this too is pushing up the forex reserve valuations," he said.
Friends with benefitsThe biggest beneficiary of strong forex reserves is the Indian currency.
Pointing to 2013 when the Indian rupee depreciated by more than 20% in a span of just 4-6 weeks, Chari states that "The size of the forex reserves with respect to the current account deficit and portfolio flows becomes a key determinant of whether the currency can come under a speculative attack."
Apart from protecting the rupee, large forex reserves act as an assurance to the world that India can meet its external obligations like payment for imports.
Summary Source | FAQ | Feedback | Top keywords: forex#1 Reserve#2 foreign#3 Indian#4 India#5
Post found in /Economics.
NOTICE: This thread is for discussing the submission topic. Please do not discuss the concept of the autotldr bot here.
submitted by autotldr to autotldr [link] [comments]

[Business] - Forex reserves cross half tn mark for 1st time | Times of India

[Business] - Forex reserves cross half tn mark for 1st time | Times of India submitted by AutoNewspaperAdmin to AutoNewspaper [link] [comments]

India's Forex Reserves Cross Half Trillion dollars For The First Time

submitted by ibef123 to u/ibef123 [link] [comments]

India's forex reserves rise to $487 billion. After the reserves reached its previous lifetime high in the week to March 6, it fell by $11.983 billion in the week ended March 20, the highest fall since the global financial crisis of 2008, and subsequently increased.

India's forex reserves rise to $487 billion. After the reserves reached its previous lifetime high in the week to March 6, it fell by $11.983 billion in the week ended March 20, the highest fall since the global financial crisis of 2008, and subsequently increased. submitted by Orwellisright to IndiaSpeaks [link] [comments]

India’s Forex Reserves Status – From a Near-defaulter to Fragile to Historic Level of $500 Billion

India’s forex reserves status has reached a greater height by touching half a trillion dollars. Here we explain what does this mean for the nation.
submitted by AahanaAshi to u/AahanaAshi [link] [comments]

India's forex reserves cross $500 bn mark - India Narrative

India's forex reserves cross $500 bn mark - India Narrative submitted by indianarrative to u/indianarrative [link] [comments]

India Forex reserves - அதிகரிப்பு | இந்த வாரம் பங்குச்சந்தை எப்படி இருக...

India Forex reserves - அதிகரிப்பு | இந்த வாரம் பங்குச்சந்தை எப்படி இருக... submitted by Tamiltraderszone to u/Tamiltraderszone [link] [comments]

Forex Reserve of India crosses $500 billion mark, Why it is significant? Current Affairs 2020 #UPSC India Forex reserve. Bharat ke record tod pradarshan se dunia ma baja apna danka  DefenseDeck India's forex reserve all time high crossed $500billion भारत ने फिर से रचा इतिहासIndia's Forex reserve today hit 513 billon India’s record breaking talent in Forex Reserve  Pakistani Reaction  Magisco  Nayab Seher

India's forex reserves comprise foreign currency assets (FCAs), gold reserves, special drawing rights (SDRs), and the country's reserve position with the International Monetary Fund (IMF). Forex reserves are external assets, in the form of gold, SDRs (special drawing rights of the IMF) and foreign currency assets (capital inflows to the capital markets, FDI and external commercial borrowings) accumulated by India and controlled by the Reserve Bank of India. Forex reserved continued to hit record high levels as they rose by $1.275 billion for the week ended July 17 to $517.63 billion, according to the latest data put out by the Reserve Bank of India India Foreign Exchange Reserves - data, historical chart, forecasts and calendar of releases - was last updated on July of 2020. source: Reserve Bank of India Foreign Exchange Reserves in India is expected to be 508000.00 USD Million by the end of this quarter, according to Trading Economics global macro models and analysts expectations. But, in practice, it also contains gold reserves, IMF reserve positions and SDRs or special drawing rights. The latter figure is more easily available and is officially known as the international reserves. Forex Reserves India. As of 26th April 2019, India has USD 418.515 billion forex reserves. India ranks eight in the world in forex reserves.

[index] [14050] [9065] [7974] [9318] [2039] [12686] [11015] [544] [9884] [8801]

Forex Reserve of India crosses $500 billion mark, Why it is significant? Current Affairs 2020 #UPSC

India's forex reserve all time high crossed $500billion After watching this video, you will learn about what is forex reserve, Why it is increasing, inspite of lockdown, what are its benefits, How ... भारत का रिकॉर्ड तोड़ प्रदर्शन, India FOREX Reserve Pakistani Reaction - Duration: 13:44. Ideal React 29,023 views New India Run For Superpower, Higest Forex Reserve Ever ,world 5th Largest Economy( GDP ) Beat UK France - Duration: 4:59. Hindi Knowledge show Recommended for you India Run For Superpower, Higest Forex Reserve Ever ,world 5th Largest Economy( GDP ) Beat UK France - Duration: 4:59. Hindi Knowledge show Recommended for you 4:59 भारत ने रच ङाला सबसे बङा इतिहास, India's Forex Reserves surge to all time high of $500 billion, US - Duration: 4:39. Make Life Simple Recommended ...