June 15, 2021

India’s foreign exchange reserves crossed the $600 billion mark for the first time after rising by $6.842 billion in the week ended on June 4. Forex reserves rose to a record $605.008 billion in the reporting week, helped by a rise in Foreign Currency Assets (FCA), a major component of the overall reserves.

Countries with the highest foreign reserves according to IMF (June 13, 2021)

  1. China – $3,330 Billion

  2. Japan – $1,378 Billion

  3. Switzerland – $1,070 Billion

  4. Russia – $605.200 Billion

  5. India – $605.008 Billion

What is it?

  • Foreign-exchange reserves (also called forex reserves or FX reserves) are reserve assets held by a central bank in foreign currencies.

  • They are used to back liabilities on their own issued currency, support the exchange rate and set monetary policy.

  • Components: India’s foreign exchange reserves comprise
    • Foreign currency assets (FCAs). These are maintained in currencies like US dollar, euro, pound sterling, Australian dollar and Japanese yen.

    • Gold

    • SDR (special drawing rights) in IMF: This is the reserve CURRENCY with IMF

    • RTP (reserve tranche position) in IMF: This is the reserve CAPITAL with IMF