India’s forex reserves position comfortable for import cover of more than 18 months

New Delhi: India’s foreign exchange reserves position is comfortable in terms of import cover of more than 18 months and provides a cushion against unforeseen external shocks.  This was stated by Union Minister of State for Finance Shri Pankaj Chaudhary in a written reply to a question in Rajya Sabha on July 27.

Whether the reserve funds are adequate to meet the international payment obligations, the Minister said that the ratio of forex reserves to total external debt stood at 101.2 percent and short-term external debt to forex reserves stood at 17.5 percent as of end-March 2021. The ratio of volatile capital flows (including cumulative portfolio inflows and outstanding short-term debt) to reserves was 67.0 percent at end-December 2020. India is comfortable in most of the external sector vulnerability indicators.

Speaking on the international currencies in our forex reserve, the Minister said the foreign currency assets, constituting more than 90 percent of India’s forex reserves, are maintained as a multi-currency portfolio comprising major currencies, such as the US dollar, Euro, Pound sterling, Japanese yen, etc.