Foreign Exchange (FX) reserves

Rajiv Poplai

• Definition and trends• Constituents• Global Comparison• Sources and Spending• Conclusion

Agenda

“ External assets that are

readily available to, and controlled by,

monetary authorities for direct financing of external payments imbalances, for

indirectly regulating the magnitudes of such imbalances through intervention in exchange markets to affect the currency exchange rate, and/or for other purposes”

Definition

Indian Trends

• Foreign Currency Assets (FCA)

• Special Drawing Rights (SDR)

• GOLD

• Reserve Tranche Position (RTP)

Constituents

Rank Country Billion USD (end of month)

1 People's Republic of China [note 1] $ 2648.3 (Sep 2010)[2]

2  Japan $ 1019 (Jun 2009)[3]

— Eurozone $ 753 (Sep 2010)

3  Russia[note 2] $ 476 (Oct 2010)[4]

4  Republic of China (Taiwan) $ 383.38 (Sept 2010) [5]

5  Saudi Arabia $ 410 (Dec 2009)[6]

6  India [note 2] $ 297.96 (Oct 29, 2010)[7]

7  South Korea $ 293.35 (October 2010)[8]

8  Brazil[note 3] $ 287 (Oct 2010)[9]

—  Hong Kong $ 266.1(Sep 2010)

9  Switzerland[note 4] $ 250 (Aug 2010)

10  Singapore $ 214.7 (Sep 2010)

11  Germany $ 184 (Sep 2009)

12  Thailand $ 159.1 (Sep 2010)[10]

13  Italy $ 144 (June 2010)

14  France $ 143 (June 2010)

15  United States $ 129 (July 2010)

Global Comparison

Sources

• Foreign Investment

• External Commercial Borrowings (ECB)

• Short Term Credit

• Banking Capital

• To stabilize Issued Currency• To counter volatility• Prepayment/Repayment of External Debt• Investment

Spending

• Foreign exchange reserves are important indicators of ability to repay foreign debt and for currency defense, and are used to determine credit ratings of nations

Conclusion

Thank You !