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Sources of Variation in Foreign Exchange Reserves in India during April - June 2021
October, 01st 2021

Earlier today, the Reserve Bank of India released balance of payments (BoP) data for April-June 2021 on its website (www.rbi.org.in). On the basis of these data, the sources of variation in foreign exchange reserves during April-June 2021 are detailed below.

Sources of Variation in Foreign Exchange Reserves: April-June 2021

During April-June 2021, there was an increase in the foreign exchange reserves, the sources of which are set out in Table 1.

Table 1: Sources of Variation in Foreign Exchange Reserves*
(US$ Billion)
Items April-June 2021 April-June 2020
I.   Current Account Balance 6.5 19.1
II.   Capital Account (net) (a to f) 25.4 0.8
  a. Foreign Investment (i+ii) 12.3 0.1
    (i) Foreign Direct Investment (FDI) 11.9 -0.5
    (ii) Portfolio Investment 0.4 0.6
        Of which:    
          Foreign Institutional Investment (FII) 0.4 1.1
          ADR/GDR 0.0 0.0
  b. Banking Capital 4.1 2.2
        Of which: NRI Deposits 2.5 3.0
  c. Short term credit 1.9 -0.2
  d. External Assistance 0.3 4.1
  e. External Commercial Borrowings 0.9 -1.2
  f. Other items in capital account 5.9 -4.3
III.   Valuation change 2.2 8.0
    Total (I+II+III) @
Increase in reserves (+) / Decrease in reserves (-)
34.1 27.9
*: Based on the 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 and capital receipts not included elsewhere and rupee denominated debt.

On a balance of payments basis (i.e., excluding valuation effects), foreign exchange reserves increased by US$ 31.9 billion during April-June 2021 as compared with US$ 19.8 billion during April-June 2020. Foreign exchange reserves in nominal terms (including valuation effects) increased by US$ 34.1 billion during April-June 2021 as compared with US$ 27.9 billion in the corresponding period of the preceding year (Table 2).

Table 2: Comparative Position of Variation in Reserves
(US$ Billion)
Items April-June 2021 April-June 2020
1 Change in Foreign Exchange Reserves
(Including Valuation Effects)
34.1 27.9
2 Valuation Effects
[Gain (+)/Loss (-)]
2.2 8.0
3 Change in Foreign Exchange Reserves on BoP basis
(i.e., Excluding Valuation Effects)
31.9 19.8
Note: Increase in reserves (+)/Decrease in reserves (-).
Difference, if any, is due to rounding off.

The valuation gain, reflecting the depreciation of the US dollar against major currencies and increase in gold prices, amounted to US$ 2.2 billion during April-June 2021 as compared with US$ 8.0 billion during April-June 2020.

(Yogesh Dayal)     
Chief General Manager

Press Release: 2021-2022/961

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