11 April, 2021
Why in News?
The country's foreign exchange reserves declined from USD 4.255 billion to USD 580.299 billion, the fall in reserves was due to a decline in the Foreign Currency Assets (FCA).
What is the reason for forex rise/fall?
Reserve Bank of India Act and the Foreign Exchange Management Act, 1999 set the legal provisions for governing the foreign exchange reserves.
Reserve Bank of India accumulates foreign currency reserves by purchasing from authorized dealers in open market operations. The foreign exchange reserves of India act as a cushion against rupee volatility once global interest rates start rising.
The Foreign exchange reserves of India consist of below four categories;
The reserves are managed by the Reserve Bank of India for the Indian government and the main component is foreign currency assets.
Where are India's forex reserves kept?
Benefits of Forex
What's the significance of rising forex reserves?
Why are forex reserves rising despite the slowdown in the economy?
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