Potential Forex reserve crisis risk

This by a friend’s relative is important for all to know as we get bogged down in unnatural headlines created by media.

Why do we need Forex?

We need reserves of foreign currencies with the RBI to meet our

A. Import expenses
B. Repayment of external debts
C. Investments abroad
D. Services like education, medical treatment, tourism, on-site projects etc

We earn forex through exports. And add more dollars thru loans

Overall imports in April-November 2022 are estimated to be USD 610.70 Billion.

India's overall exports (Merchandise and Services combined) in April-November2022 are estimated to be USD 499.67 Billion.

As per RBI reports at end-September 2022, India's external debt was placed at US$ 621.5 billion

The external debt to GDP ratio stood at 19.2 per cent as at end- September 2022

More than 40%, or $267 billion worth of external debt of the total $621 billion, is due for repayment in the next nine months, the Reserve Bank of India data showed.

This repayment is equivalent to about 44% of the India's foreign exchange reserves.

The rupee fell to a new record low of ₹82.87 to the US dollar on 24th Feb.

When the exchange value of Indian Rupee falls against the US Dollar, it means that we as a Nation will have to pay more Rupees against the Dollar loans.

More than the dollar value at the time of loan.

Economists estimate the current account deficit, or excess of imports over exports, will touch 3.1% of India's GDP, up from 1.2% last year.

From the meagre GDP Growth that we do, a large portion of that drains out for our growing imports and paying back loans with a weak Rupee

India's foreign exchange (forex) reserves dropped by $5.68 billion to $561.26 billion for the week ended February 17th, the lowest in 11 weeks and the Reserve Bank of India likely sold dollars to prevent further weakness in rupee.

The value of gold reserves slumped by $1.04 billion to $41.81billion.

Special Drawing Rights (SDRs) fell by $87 million to $18.26 billion and India's reserve position with the International MonetaryFund (IMF) dropped by $34 million to $5.11 billion during the last week.

The forex reserves have dipped amid continued selling pressure in the Indian equities markets, especially by the foreign institutions. "The domestic market is broadly demonstrating a lack of confidence despite global markets turning green

Gross domestic product (GDP) growth in the last quarter slipped to an annual 4.6%, according to the median forecast of 42 economists in the February 10-24 survey.

It is expected to slow further to 4.4% in the current quarter, and across 2023/24. more  

View all 7 comments Below 7 comments
I agree with the views endorsed by Anil Chandok. Where will it all end??? more  
This is the second time that India has the chance to become the factory of the world (first was in 1970s). Again India is going to miss out BECAUSE of petty politics, labour laws, investment, skilled manpower, infrastructure BUT most importantly because of entrenched and corrupt bureaucracy and lack of law & order in rural areas where cheaper land is available for industries. more  
Now the world knows why East Asian products including Indian are cheap and environmental friendly. The produce is less costly. That is why GDP and cost of living. The GDP as growth index needs to be changed. 2.The currency values should be the life index and not artificial to no produce country exchange more  
Very helpful information more  
Imports should be reduced. There is scope for reducing foreign travel, when business can be conducted online, saving foreign exchange. more  
Post a Comment

Related Posts

    • 60 of most polluted cities out of 100 in India

      See attached friends. 60 of the 100 most polluted cities in the world are in India and lets face this, none in southern India so pollution is a north India problem. I saw LC’s envi...

      By Vinita Agrawal
    • Wow Localcircles survey impact

      Friends of LocalCircles, our survey escalation and news papers publishing the same has worked. The aviation minister called meeting of airlines yesterday and asked them to check their loot.

      By Shailesh Deshmukh
    • GST looters compromising peoples data

      So a couple in Noida with their family of CAs conducted a 10000 crore scam in which they used over 600,000 pan cards. Created a ton of shell companies and played the input tax credit game. They bee...

      By Sneha Goyal
    • Special airline fares for emergency and bereavement

      This is just a wonderful wonderful idea to restrict airline loot. https://www.localcircles.com/a/pres...

      By Reeta Kumar
    • Inconvenience because some VIP wants to show off

      So japanese ambassador hired an army of security guards and Govt officials to clear the platform in Mumbai and the coach for this stupid photo-op ! What a joke ! Inconveniencing thousands of citize...

      By Shivani Khiste
    • Seperate category for bereavement air fares

      As well as medical emergencies should be the norm in India. Mumbai Times of India is quoting attached LocalCircles survey saying that either fare caps must be reintroduced or a seperate category of...

      By Seema Shah
    • Digital India has issues

      Sony Liv takes 90 days to cancel a subscription. Even monthly subscription. HDFC doesn’t let you cancel auto-pay online seamlessly. So you have to go to the branch and fill a form...

      By Sudesh Rai
    • Gutka Or chewable tobacco ban a must

      We have 4-5 members in the extended family who are addicted to this and 4-5 times a day they must have the Gutka. It is available easily and unless supplies are shut down nothing will happen. All t...

      By Shivani Batra
    • RBI not doing well on 2000 rupee

      If you want to exchange RS2000 at HDFC Bank, people must carry a valid government ID Proof without KYC people can't exchange single 2000 note. RBI must clarify in people interest is KYC mandatory o...

      By Ajay Dutta
    • Ashamed of our cricket and bollywood stars

      Kapil Dev, Gawaskar, Sehwag from cricket and the video teacher below Shahrukh Khan, Ajay Dewgan, Akshay Kumar and even Amitabh Bachchan are all doing pan masala ads teaching the next generation how...

      By Shweta Kotharii
    • Tax BCCI

      Govt will establish fresh regulations and ways to impose additional tax on existing taxpayers but won't amend laws to include BCCI in the tax bracket, one of the World's richest sports body that ge...

      By Shailesh Deshmukh
Enter your email and mobile number and we will send you the instructions

Note - The email can sometime gets delivered to the spam folder, so the instruction will be send to your mobile as well

All My Circles
Invite to
(Maximum 500 email ids allowed.)