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Sources of Variation in Foreign Exchange Reserves in India during 2017-18
June, 14th 2018

Earlier today, the Reserve Bank of India released balance of payments (BoP) data for January-March 2018 on its website ( On the basis of these data, the sources of variation in foreign exchange reserves during 2017-18 have been compiled.

Sources of Variation in Foreign Exchange Reserves: 2017-18

During 2017-18, there was an increase in the foreign exchange reserves. The sources of variation in the foreign exchange reserves are set out in Table 1.

Table 1: Sources of Variation in Foreign Exchange Reserves*
(US$ billion)
Items 2016-17 2017-18
I.   Current Account Balance -14.4 -48.7
II.   Capital Account (net) (a to f) 36.0 92.3
  a. Foreign Investment (i+ii) 43.2 52.4
    (i) Foreign Direct Investment (FDI) 35.6 30.3
    (ii) Portfolio Investment 7.6 22.1
            Of which:    
              Foreign Institutional Investment (FII) 7.8 22.2
              ADR/GDR 0.0 0.0
  b. Banking Capital -16.6 16.2
            Of which: NRI Deposits -12.4 9.7
  c. Short term credit 6.5 13.9
  d. External Assistance 2.0 2.9
  e. External Commercial Borrowings -6.1 -0.2
  f. Other items in capital account 7.0 7.0
III.   Valuation change -11.8 11.0
    Total (I+II+III) @
Increase in reserves (+) / Decrease in reserves (-)
9.8 54.6
*: Based on old format of BoP which may differ from the new format (BPM6) in the treatment of transfers under the current account and ADRs/ GDRs under portfolio investment.
@: Difference, if any, is due to rounding off. 
Note: ‘Other items in capital account’ apart from ‘Errors and Omissions’ include SDR allocation, leads and lags in exports, funds held abroad, advances received pending issue of shares under FDI, capital receipts not included elsewhere and ‘rupee denominated debt’.

On a balance of payments basis (i.e., excluding valuation effects), the foreign exchange reserves increased by US$ 43.6 billion during 2017-18 as compared with an increase of US$ 21.6 billion during 2016-17. The foreign exchange reserves in nominal terms (including valuation effects) increased by US$ 54.6 billion during 2017-18 as compared with an accretion of US$ 9.8 billion in the preceding year (Table 2).

Table 2: Comparative Position of Variation in Reserves
(US$ billion)
Items 2016-17 2017-18
1 Change in Foreign Exchange Reserves 
(Including Valuation Effects)
9.8 54.6
2 Valuation Effects
(Gain (+)/Loss (-))
-11.8 11.0
3 Change in Foreign Exchange Reserves on BoP basis 
(i.e., Excluding Valuation Effects)
21.6 43.6
Note: Increase in reserves (+)/Decrease in reserves (-).
Difference, if any, is due to rounding off.

The valuation gain, mainly reflecting the depreciation of the US dollar against major currencies, amounted to US$ 11.0 billion during 2017-18 as against a loss of US$ 11.8 billion in 2016-17.

Jose J. Kattoor
Chief General Manager

Press Release: 2017-2018/3264

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