India’s foreign-exchange reserves (forex) surpassed Russia’s to become the world’s fourth largest, as the RBI continues to hoard dollars to cushion the economy against any sudden outflows.
- India is now behind China, which has the largest forex holding followed by Japan and Switzerland.
- According to the International Monetary Fund (IMF), as of March 14, 2021, Russia’s Forex holdings fell to $580.1 billion, down $9.5 billion from the previous week.
- According to the RBI, India’s foreign exchange reserves declined by $4.255 billion to $580.299 billion in the week ended March 5 from $584.554 billion on February 26.
- India’s forex reserves had touched a record high of $590.185 billion in the week ended January 29, 2021.
- India’s reserves, enough to cover roughly 18 months of imports, have been bolstered by a rare current-account surplus, rising inflows into the local stock market and foreign direct investment.
- India’s forex reserves comprise Foreign Currency Assets (FCAs), gold reserves, Special Drawing Rights (SDRs) and India’s reserve position with the International Monetary Fund (IMF).
- FCAs is the largest component of the forex reserves.
