India’s foreign currency reserves go up, to cover import bills over 8 months
India’s foreign currency reserve has increased from $313.84 billion to $341.64 billion in the past six months, which is enough to cover the country’s import bills up to 8.9 months. “At the end of March 2015, the import cover increased to 8.9 months from 8.1 months at end-September 2014,” the Reserve Bank of India said in its half-yearly report on the Management of Foreign Exchange Reserves released on Tuesday. The import cover indicates the country’s total foreign currency asset (FCA). The reserve was able to cover only 7.8 months of import at end-March 2014 and 6.6 months at end-September, 2013. Change in the FCA occurs mainly due to purchases and sales of foreign exchange by the central bank in the foreign exchange market, income earned through deployment of the foreign exchange reserves, external aid receipts of the government and the effects of revaluation of the assets. “The ratio of short-term debt to the foreign exchange reserves, which was 27.7% at end-September 2014, also declined to 24.8% at end-March 2015. The ratio of volatile capital flows (defined to include cumulative portfolio inflows and short-term debt) to the reserves has declined from 94.3% as at end-September 2014 to 91.7% as at end-March 2015,” the report said. The report also shows the country's international investment position (IIP)—a summary of external assets and liabilities. “The net IIP as at end-March 2015, was negative at $363.0 billion, implying that our external liabilities are more than the external assets,” the RBI said. Last year, in March-end and September-end, the net IIP was recorded $ (-) 336.8 billion and $(-) 356.9 billion respectively.
July 29, 2015 | 7:03 pm IST.