RBI to reshuffle foreign currency asset weightages

MUMBAI: The uncertainties surrounding the covid-19 pandemic has forced the Reserve Bank of India (RBI) to reshuffle the weightages of its foreign currency assets (FCA). RBI’s deposits with other central banks and the Bank for International Settlements (BIS) accounted for 33.37% of FCA at March-end, up from 28.83% at the end of September last year. This rebalancing is at the cost of RBI’s investment in securities, as a percentage of its FCA, falling from 63.72% to 59.57% during the same period.

FCA, gold, special drawing rights issued by the International Monetary Fund and reserve tranches maintained with it by RBI, make up for the total foreign exchange reserves. RBI’s FCA are typically divided into investment in AAA-rated sovereign securities, deposits with other central banks and BIS, and deposits with overseas commercial banks. According to RBI’s halfyearly report on management of foreign exchange reserves, of the total foreign currency assets of $442.21 billion at end-March, $263.45 billion was invested in securities, $147.55 billion was deposited with other central banks and BIS, and the balance $31.21 billion comprised deposits with commercial banks overseas.

While the total FCA have risen 10%, compared to Septemberend, RBI’s deposits with other central banks and BIS have increased by over 27%.