India adds 1 more month of import cover in Dec qtr
The ratio of short-term debt to reserves falls to 17.7%, from 18.9% in Sept
India’s import cover improved to 18.6 months at the end of December 2020, from 17.1 months at endseptember 2020, the Reserve Bank of India (RBI) said in its half-yearly report on foreign exchange management, released on Wednesday.
The ratio of short-term debt to reserves, which was 18.9 per cent at endseptember, declined to 17.7 per cent at end-december.
The ratio of volatile capital flows (including cumulative portfolio inflows and outstanding short-term debt) to reserves declined from 68.0 per cent to 67.0 per cent in the same period, the RBI said.
As at end-march 2021, the RBI held 695.31 metric tonnes of gold. Of this, 403.01 metric tonnes were held overseas with the Bank of England and the Bank of International Settlements, and 292.30 tonnes were held domestically.
In value terms (USD), the share of gold in total forex reserves decreased from about 6.69 per cent as of endseptember 2020 to about 5.87 per cent as of end-march 2021. During this period, forex reserves increased from $544.69 billion to $576.98 billion.
The RBI reserves are maintained in various major currencies, such as US dollar, Euro, Pound sterling, Japanese yen, etc., but are denominated and expressed in dollars.
Movements in the foreign currency assets occur mainly on account of purchase and sale of forex by the RBI, income arising out of the deployment of the forex reserves, external aid receipts of the central government and changes on account of revaluation of the assets.
Excluding valuation changes, forex reserves increased by $83.9 billion during April-december 2020 compared to $40.7 billion during the corresponding period a year ago.
Including valuation changes, the reserves increased by $108.0 billion from $47 billion in the period under consideration.
“The valuation gain, reflecting the depreciation of the US dollar against major currencies and increase in gold prices, amounted to $24.1 billion during April-december 2020 compared with $6.3 billion during April-december 2019,” the RBI said in its report.