Sources of Variation in Foreign Exchange Reserves in India during April-September 2015

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Published on December 22, 2015

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Sources of Variation in Foreign Exchange Reserves in India during April-September 2015

Earlier today, the Reserve Bank of India released the Balance of Payments (BoP) data for July-September 2015 on its website (www.rbi.org.in). On the basis of these data, the sources of variation in foreign exchange reserves during April-September 2015 have been compiled.

Sources of Variation in Foreign Exchange Reserves: April-September 2015

During April-September 2015, 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 to Foreign Exchange Reserves*
(US $ billion)
Items			2014-15 April-September	2015-16 April-September
I.		Current Account Balance	-18.4	-14.4
II.		Capital Account (net) (a to f)	36.5	24.9
	a.	Foreign Investment of which	37.3	7.9
		of which: Foreign Direct Investment	15.1	16.7
		Portfolio Investment	22.2	-8.7
		FII	22.3	-9.4
		ADR/GDR	0.0	0.4
	b.	Banking Capital	-0.5	18.3
		Of which: NRI Deposits	6.5	10.1
	c.	Short term credit	-1.4	-1.2
	d.	External Assistance	0.7	0.2
	e.	External Commercial Borrowings	0.8	-0.9
	f.	Other items in capital account	-0.3	0.6
III.		Valuation change	-8.5	-1.9
		Total (I+II+III) @ Increase in reserves(+) / Decrease in reserves (-)	9.6	8.7
*: Based on old format of BoP. @: Difference, if any, is due to rounding off. Note: ‘Other items in capital account’ apart from ‘Errors and Omissions’ include SDR allocations, leads and lags in exports, funds held abroad, advances received pending issue of shares under FDI and transactions of capital receipts not included elsewhere.

On balance of payments basis (i.e., excluding valuation effects), the foreign exchange reserves increased by US$ 10.6 billion during April-September 2015 as compared to an increase of US$ 18.1 billion during April-September 2014. The foreign exchange reserves in nominal terms (including the valuation effects) increased by US$ 8.7 billion during April-September 2015 as compared to an increase of US$ 9.6 billion during the same period of preceding year (Table 2).

Table 2: Comparative Position of Variation in Reserves
(US$ billion)
Items		2014-15	2015-16
Items		April-September	April-September
1	Change in Foreign Exchange Reserves (Including Valuation Effects)	9.6	8.7
2	Valuation Effects (Gain (+)/Loss (-))	-8.5	-1.9
3	Change in Foreign Exchange Reserves on BoP basis (i.e., Excluding Valuation Effects)	18.1	10.6
Note: Increase in reserves (+)/Decrease in reserves (-). Difference, if any, is due to rounding off.

The valuation loss, mainly reflecting the appreciation of the US dollar against major currencies, amounted to US$ 1.9 billion during April-September 2015 as compared with US$ 8.5 billion during the same period of preceding year.

Alpana Killawala
Principal Chief General Manager

Press Release : 2015-2016/1479