India's Forex reserve at $500 billion is now 5th largest in the world

India’s foreign exchange reserves rose by $1.27 billion and reached $506.83.

- Jyotsna Joshi

HIGHLIGHTS

• India’s Forex reserve at $501.7 billion in june 2020 increased by 8,400 per cent from $5.8 billion as of March 1991.

• The Forex are equivalent to almost 1/5th of the country’s gross domestic product.

• India’s foreign exchange reserves at more than USD 500 billion have become 5th largest in world.

• The reserves are estimated to cover 13 months of imports.

Few days ago, India’s foreign exchange reserves rose by $1.27 billion and reached $506.83. The International Monetary Fund has also declared that India’s Forex reserves at more than USD 500 billion have become 5th largest in world after China, Japan, Switzerland and Russia.

Despite economy slowing and economic activities on a halt from past few months, on June 5, 2020 India’s forex reserves hit an all-time high of $501.7 billion. The reserve has increased by almost 8,400 per cent from $5.8 billion as of March 1991 to the current level. It is a significant achievement for the country. The forex reserves today is equivalent to almost 1/5th of the country’s gross domestic product and is estimated to cover 13 months of imports. This is a true sign of India’s economic growth.

What exactly are Forex Reserves?

Basically, the forex reserves are external assets, in the form of gold, SDRs (special drawing rights of the IMF) and foreign currency assets (capital inflows to the capital markets, FDI and external commercial borrowings) accumulated by India and controlled by the Reserve Bank of India.