RBI report shows India's forex reserves cover stands at 11.2 months of imports
Oct 30, 2024
New Delhi [India], October 30 : The Reserve Bank of India (RBI) in its latest report stated that the country's foreign exchange reserves cover of imports (on balance of payments basis) stood at 11.2 months.
The RBI report released on Tuesday provided an update on India's foreign exchange reserves, import cover, and International Investment Position (IIP), providing insight into the country's external financial standing as of the end of June 2024.
The latest figure in the country's import cover represents a slight decline of one month from the 11.3-month cover recorded at the end of March 2024.
Import cover is a measure of the number of months of imports that the current level of foreign exchange reserves can support, and serves as an important indicator of the country's resilience against external economic shocks.
It said "At the end of June 2024, foreign exchange reserves cover of imports (on balance of payments basis) stood at 11.2 months (11.3 months at end-March 2024)".
Further details revealed an increase in the ratio of short-term debt to reserves. As of March 2024, short-term debt (on an original maturity basis) accounted for 19.7 per cent of reserves. By the end of June, however, this ratio rose to 20.3 per cent, indicating a slight uptick in the share of short-term liabilities relative to the country's reserves.
Additionally, the ratio of volatile capital flows--which includes cumulative portfolio inflows and outstanding short-term debt--relative to reserves saw a minor increase, from 69.8 per cent at the end of March to 70.1 per cent at the end of June.
The RBI report also highlighted changes in India's International Investment Position (IIP), which is a comprehensive record of the country's external financial assets and liabilities.
As per report between the end of June 2023 and the end of June 2024, India's external assets saw an increase of USD 108.4 billion, while external liabilities rose by USD 97.7 billion over the same period.
This growth in assets and liabilities highlights the country's ongoing international engagements and financial transactions.
Overall, these updates reflect India's external economic position and provide insights into the resilience of its foreign exchange reserves amid global financial dynamics. The RBI's data on the IIP, along with measures like import cover and debt-to-reserves ratio, continue to be crucial in assessing India's economic stability in a volatile global environment.
