Mumbai, Sep 3 (IANS) An exponential rise in India’s Special Drawing Rights allocation aided in the accural of over $16.663 billion into India’s foreign exchange reserves during the week ended August 27.
In financial parlance, SDRs are international reserve assets which are created by the International Monetary Fund (IMF) and are periodically allocated to its members in proportion to their quotas.
The SDR balances are equivalent to liquid balances in convertible currencies in almost every aspect.
Accordingly, the Reserve Bank of India’s (RBI) forex reserves increased to $633.558 billion from $616.895 billion reported for the week ended August 20.
Earlier in the week, the RBI said that IMF has made an allocation of SDR 12.57 billion which is equivalent to around $17.86 billion at the latest exchange rate to India on August 23.
“The total SDR holdings of India now stands at SDR 13.66 billion (equivalent to around $19.41 billion at the latest exchange rate) as on August 23, 2021.”
As per the RBI’s weekly statistical supplement, India’s forex reserves comprise foreign currency assets (FCAs), gold reserves, SDRs, and the country’s reserve position with the IMF.
However, on a weekly basis, FCAs, the largest component of the forex reserves, edged lower by $1.409 billion to $571.600 billion.
On the other hand, the value of the country’s gold reserves rose by $192 million to $37.441 billion.
Similarly, the SDR value rose by a whopping $17.866 billion to $19.407 billion.
In addition, the country’s reserve position with the IMF rose by $14 million to $5.110 billion.
“While the increase in SDR allocation further boosts the existing foreign exchange reserves for India, it has already been in a comfortable position and can cover over 15 months of imports, taking the average monthly import bill for the last 5 years,” Acuite Ratings & Research Chief Analytical Officer Suman Chowdhury said.
“With the recent moderation in the taper concerns by the US Fed, foreign portfolio inflows have picked up and along with the strong export outlook, have led to a stronger rupee.”