Foreign Exchange Reserve

Topics: International economics, Balance of payments, Bretton Woods system Pages: 10 (2543 words) Published: November 16, 2008
Report on

Foreign
Exchange Reserves

Reserve Bank of India
Central Office
Mumbai

2005-06 (covering period up to March 2006)

Content

Movement of Reserves

1. Introduction
2. Review of Growth of Reserves since 1991
3. Sources of Accretion to Reserves in the Recent Period
4. External Liabilities vis-à-vis Foreign Exchange Reserves 5. Prepayment/Repayment of External Debt
6. Financial Transaction Plan (FTP) of IMF
7. Adequacy of Reserves
8. Investment Pattern and Earnings from Foreign Exchange Reserves

Foreign Exchange Reserves

The Reserve Bank of India (RBI) undertook a review of the main policy and operational matters relating to management of the reserves, including transparency and disclosure and decided to compile and make public half-yearly reports on management of foreign exchange reserves for bringing about more transparency and also for enhancing the level of disclosure in this regard. These reports are being prepared with reference to positions as of 31st March and 30th September each year, with a time lag of about 3 months. The first such report with reference to September 30, 2003 was placed in the public domain on February 3, 2004. This is the sixth report on foreign exchange reserves with reference to March 31, 2006. The report is a compilation of quantitative information with regard to external reserves, such as, level of foreign exchange reserves, sources of accretion to foreign exchange reserves, external liabilities vis-à-vis foreign exchange reserves, prepayment/repayment of external debt, Financial Transaction Plan (FTP) of IMF, adequacy of reserves, etc. In order to avoid repetition, Sections II and III of the first report, dealing with various matters relating to the qualitative aspects of management of forex reserves and cross-country comparison of disclosure in respect of management of external reserves, respectively, do not figure in this report. Interested readers may refer to March 2004 issue of RBI Bulletin or visit RBI website (www.rbi.org.in) for accessing the first report on foreign exchange reserves. Movement of Reserves

1. Introduction
The level of foreign exchange reserves has steadily increased from US$ 5.8 billion as at end-March 1991 to US$ 113.0 billion by end-March 2004 and further to US$ 141.5 billion by end-March 2005. It stood at US$ 151.6 billion as at end-March 2006 (Table 1). Although both US dollar and Euro are intervention currencies, the foreign exchange reserves are denominated and expressed in US dollar only.

Table 1: Movement in Reserves | | | | | |(US $ million) | |Date |FCA |SDR |GOLD | |Forex Reserves | | | | | |RTP | | |31-Mar-04 |107,448 |2 (1.6) |4,198 |1,311 |112,959 | |30-Sep-04 |114,083 |1 (1.0) |4,192 |1,303 |119,579 | |31-Mar-05 |135,571 |5 (3.0) |4,500 |1,438 |141,514 | |30-Sep-05 |136,920 |4 (3.0) |4,712 |1,423 |143,058 | |31-Mar-06 |145,108 |3 (2.0) |5,755 |756 |151,622 |

Note: 1. FCA (Foreign Currency Assets): FCA is maintained as a multicurrency portfolio, comprising major currencies, such as, US dollar, Euro, Pound sterling, Japanese yen, etc. and is valued in US dollars.

2. SDR: Values in SDR have been indicated in...
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