India’s forex reserves can cover 10 months’ imports: RBI

According to the RBI’s report on management of foreign exchange reserves, the import cover increased to 9.8 months in end-September 2015 from 8.9 months at end-March 2015

The Dollar Business Bureau 

  India’s foreign exchange reserves have increased to $350.29 billion during April-September 2015 from $341.64 billion recorded during the previous six-month period ending March 2015 and the buffer is enough to cover the country’s import bills up to 9.8 months. According to the Half-yearly Report on Management of Foreign Exchange Reserves released by the Reserve Bank of India (RBI) on Monday, the import cover increased to 9.8 months from 8.9 months at end-March 2015. Increase in forex reserves has also reduced the country’s liabilities in terms of foreign debt, strengthening the economy’s ability to tackle any external shocks. The country’s net International Investment Position (IIP) in end-September 2015 was -$357.8 billion, which implies that the external liabilities are more than external assets. But the amount is less than that of the previous six-month period. “The net IIP as at end- September 2014 and end- March 2015 was $(-) 361.1 billion and $(-) 364.7 billion respectively,” the report said. The ratio of short-term debt to the foreign exchange reserves, which was 25% at end-March 2015, has also declined to 24.6% at end-September 2015. The ratio of volatile capital flows to the reserves—another factor to indicate adequacy of reserves— has also witnessed improvement, declining from 92.3% as in end-March 2015 period to 88% during the next six months period. Of the total foreign exchange reserves, the share of gold is valued 5.2% in terms of US dollar. The share of gold in forex reserves was 6.4% in September 2014 and 5.6% in March 2015.

As in September 2015, the RBI has 557.75 tonnes of gold; of which, 265.49 tonnes are kept in safe custody with the Bank of England and the Bank for International Settlements (BIS).

January 12, 2016 | 03:10pm IST

The Dollar Business Bureau - Jan 12, 2016 12:00 IST