Forex: Import Coverage Falls Below December Levels As Forex Pool Shrinks

Kolkata: India’s foreign exchange reserves were sufficient to cover about 13 months of imports at the end of 2021, the Reserve Bank of India said in its semi-annual Foreign Reserves Management Report.

At the end of December 2021, foreign exchange reserves stood at 633.6 billion dollars. It fell to $597.7 billion as of April 29 this year, implying that import coverage also fell from December.

Reserves hit a record high of $642.453 billion on September 3 last year, which was enough to cover almost 15 months of imports on a balance of payments basis. The ratio of short-term debt to reserves fell from 16.5% at the end of September 2021 to 18.1% at the end of December 2021.

Currency assets include multi-currency assets that are held in multi-asset portfolios. At the end of March 2022, of total assets of $540.72 billion, $363.03 billion was invested in securities, $140.54 billion was deposited with other central banks and the Bank for International Settlements and the remaining $37.16 billion included deposits with commercial banks overseas, the report showed.

At the end of March, RBI held 760.42 metric tons of gold (including gold deposits of 11.08 metric tons). While 453.52 metric tons of gold are held overseas by the Bank of England and the Bank for International Settlements (BIS), 295.82 metric tons of gold are held domestically.

The share of gold in total foreign exchange reserves rose to 7% at the end of March, from around 5.88% six months earlier.

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