Forex reserves hit record high, lift the rupee

India's foreign-exchange reserves rose to a fresh record high in the latest weekly RBI data, driven mainly by a rise in Foreign Currency Assets (FCA) and a revaluation gain in gold holdings. Higher reserves give the central bank more room to defend the rupee and cover several months of imports.

• • Forex reserves are managed by the RBI under the FEMA, 1999 framework.
• • They have four components: FCA, Gold, SDRs and the Reserve Tranche Position (RTP) with the IMF.
• • FCA is the largest component of the reserves.
• • 'Import cover' measures how many months of imports the reserves can finance.

FCA

Foreign Currency Assets — the largest part of the reserves, held in major currencies.

SDR

Special Drawing Rights — an international reserve asset created by the IMF.

RTP

Reserve Tranche Position — a country's reserve quota with the IMF that can be drawn without conditions.

• Q. Which of the following is NOT a component of India's forex reserves? (FCA, Gold, SDR, RTP are the four components.)
• Q. Which body manages India's foreign-exchange reserves? (Reserve Bank of India.)

• ↗ RBI Weekly Statistical Supplement
• ↗ Economic Survey — External Sector chapter