Daily Current Affairs : 29-June-2024
India’s foreign exchange (forex) reserves saw an increase of USD 816 million, reaching a total of USD 653.711 billion for the week ending June 21. This growth reflects the continuing strength of India’s economy and its ability to manage external economic challenges. The data was released by the Reserve Bank of India (RBI), providing a clear picture of the components that make up the country’s forex reserves.
Key Components of Forex Reserves
India’s forex reserves are made up of several important components, each contributing to the overall growth or decline in the reserves. These components include Foreign Currency Assets (FCA), Gold Reserves, Special Drawing Rights (SDRs), and the Reserve Position with the International Monetary Fund (IMF). Let’s take a closer look at these components:
1. Foreign Currency Assets (FCA)
- Major Component: FCA is the largest part of India’s forex reserves.
- Change: It decreased by USD 106 million, reaching USD 574.134 billion.
- Reason: The change in FCA reflects the fluctuations in the value of non-US currencies like the euro, pound, and yen against the US dollar.
2. Gold Reserves
- Increase in Gold: India’s gold reserves saw a significant rise of USD 988 million.
- Total Value: Gold reserves now stand at USD 956 billion.
- Significance: Gold acts as a safe haven asset, offering stability to the country’s financial system during global uncertainties.
3. Special Drawing Rights (SDRs)
- Change: SDRs decreased by USD 57 million.
- Total Value: SDRs now total USD 49 billion.
- Importance: SDRs are international reserve assets created by the IMF to supplement its member countries’ official reserves.
4. Reserve Position with the IMF
- Decline: India’s reserve position with the IMF decreased by USD 9 million.
- Current Value: It stands at USD 4.572 billion.
- Role: This represents India’s holdings with the IMF that can be used to meet balance of payments needs.
Important Points:
- India’s Forex Reserves Increase: India’s forex reserves grew by USD 816 million, reaching USD 653.711 billion for the week ending June 21.
- Key Components of Forex Reserves:
- Foreign Currency Assets (FCA):
- Decreased by USD 106 million to USD 574.134 billion.
- Reflects changes in the value of non-US currencies (euro, pound, yen) against the US dollar.
- Gold Reserves:
- Increased by USD 988 million, totaling USD 956 billion.
- Gold provides stability to the country’s financial system.
- Special Drawing Rights (SDRs):
- Decreased by USD 57 million, standing at USD 49 billion.
- SDRs are IMF-created reserve assets for member countries.
- Reserve Position with IMF:
- Declined by USD 9 million, totaling USD 4.572 billion.
- Represents India’s holdings with the IMF for balance of payments needs.
- Significance of Increase: Despite small declines in some components, the overall rise in forex reserves highlights India’s strong economic position.
Why In News
India’s forex kitty jumps by USD 816 million to reach USD 653.71 billion, reflecting a steady increase in the country’s foreign exchange reserves, which plays a crucial role in maintaining economic stability and meeting external financial obligations.
MCQs about India’s Forex Reserves
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What was the total value of India’s forex reserves for the week ending June 21?
A. USD 653.711 million
B. USD 653.711 billion
C. USD 650 billion
D. USD 660 billion
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Which component of India’s forex reserves saw the highest increase during the week?
A. Foreign Currency Assets (FCA)
B. Gold Reserves
C. Special Drawing Rights (SDRs)
D. Reserve Position with the IMF
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What was the value of India’s Special Drawing Rights (SDRs) after the decrease of USD 57 million?
A. USD 50 billion
B. USD 49 billion
C. USD 48 billion
D. USD 47 billion
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Which of the following components of India’s forex reserves decreased during the week?
A. Foreign Currency Assets (FCA)
B. Gold Reserves
C. Reserve Position with the IMF
D. Both A and C
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