Sources of Variation in Foreign Exchange Reserves in India during April-December 2019

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প্ৰকাশ কৰা তাৰিখ মাৰ্চ 12, 2020

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Sources of Variation in Foreign Exchange Reserves in India during April-December 2019

Earlier today, the Reserve Bank of India released the balance of payments (BoP) data for October-December 2019 on its website (www.rbi.org.in). On the basis of these data, the sources of variation in foreign exchange reserves during April-December 2019 have been compiled.

Sources of Variation in Foreign Exchange Reserves: April-December 2019

During April-December 2019, there was an increase in the foreign exchange reserves. The sources of variation in the foreign exchange reserves are set out in Table 1.

Table 1: Sources of Variation in Foreign Exchange Reserves*
(US$ Billion)
Items			2019-20 April-December	2018-19 April-December
I.		Current Account Balance	-22.3	-52.6
II.		Capital Account (net) (a to f)	63.0	35.1
	a.	Foreign Investment (i+ii)	47.2	14.2
		(i) Foreign Direct Investment (FDI)	32.1	24.3
		(ii) Portfolio Investment	15.1	-10.1
		Of which:
		Foreign Institutional Investment (FII)	15.3	-13.7
		ADR/GDR	0.0	1.8
	b.	Banking Capital	-0.7	15.5
		Of which: NRI Deposits	5.9	7.0
	c.	Short term credit	-0.03	0.6
	d.	External Assistance	3.2	2.2
	e.	External Commercial Borrowings	12.6	2.9
	f.	Other items in capital account	0.8	-0.2
III.		Valuation change	6.3	-11.5
		Total (I+II+III) @ Increase in reserves (+) / Decrease in reserves (-)	47.0	-29.0
*: Based on the old format of BoP which may differ from the new format (BPM6) in the treatment of transfers under the current account and ADRs/ GDRs under portfolio investment. @: Difference, if any, is due to rounding off. Note: ‘Other items in capital account’ apart from ‘Errors and Omissions’ include SDR allocation, leads and lags in exports, funds held abroad, advances received pending issue of shares under FDI and capital receipts not included elsewhere and rupee denominated debt.

On a balance of payments basis (i.e., excluding valuation effects), the foreign exchange reserves increased by US$ 40.7 billion during April-December 2019 as against a decrease of US$ 17.5 billion during April-December 2018. The foreign exchange reserves in nominal terms (including the valuation effects) increased by US$ 47.0 billion during April-December 2019 as against a decline of US$ 29.0 billion during the same period of the preceding year (Table 2).

Table 2: Comparative Position of Variation in Reserves
(US$ Billion)
Items		2019-20	2018-19
Items		April-December	April-December
1	Change in Foreign Exchange Reserves (Including Valuation Effects)	47.0	-29.0
2	Valuation Effects (Gain (+)/Loss (-))	6.3	-11.5
3	Change in Foreign Exchange Reserves on BoP basis (i.e., Excluding Valuation Effects)	40.7	-17.5
Note: Increase in reserves (+)/Decrease in reserves (-). Difference, if any, is due to rounding off.

The valuation gain, reflecting the depreciation of the US dollar against major currencies and increase in gold prices, amounted to US$ 6.3 billion during April-December 2019 as against a loss of US$ 11.5 billion during the same period of the preceding year.

(Yogesh Dayal)
Chief General Manager

Press Release: 2019-2020/2051