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Earlier today, the Reserve Bank of India released the Balance of Payments (BoP) data for 2012-13 on its website (www.rbi.org.in). On the basis of these data, the sources of variation in foreign exchange reserves during 2012-13 have been compiled.
Sources of Variation in Foreign Exchange Reserves: 2012-13
During 2012-13, there was a decline 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 | April-March | April-March 2012-13 | ||
I. |
| Current Account Balance | -78.2 | -88.2 |
II. |
| Capital Account (net) (a to f) | 65.4 | 92.0 |
| a. | Foreign Investment (i+ii) | 39.2 | 46.7 |
|
| (i) Foreign Direct Investment | 22.1 | 19.8 |
|
| (ii) Portfolio Investment | 17.2 | 26.9 |
|
| Of which: |
|
|
|
| FIIs | 16.8 | 27.6 |
|
| ADRs/GDRs | 0.6 | 0.2 |
| b. | External Commercial Borrowings | 10.3 | 8.5 |
| c. | Banking Capital | 16.2 | 16.6 |
|
| of which: NRI Deposits | 11.9 | 14.8 |
| d. | Short-Term Trade Credit | 6.7 | 21.7 |
| e. | External Assistance | 2.3 | 1.0 |
| f. | Other Items in Capital Account | -9.4 | -2.4 |
III. |
| Valuation Change | 2.4 | -6.2 |
|
| Total (I+II+III) @ | -10.4 | -2.4 |
*: Based on old format of BoP | ||||
On a balance of payments basis (i.e., excluding valuation effects), the foreign exchange reserves increased by US$ 3.8 billion during 2012-13 as against a decline of US$ 12.8 billion during 2011-12. The foreign exchange reserves in nominal terms (including the valuation effects) declined by US$ 2.4 billion during 2012-13 as compared to a decline of US$ 10.4 billion during the previous year (Table 2).
Table 2: Comparative Position of Variation in Reserves | |||
(US$ billion) | |||
Items | April-March | April-March 2012-13 | |
1. | Change in Foreign Exchange Reserves (Including Valuation Effects) | -10.4 | -2.4 |
2. | Valuation Effects (Gain (+)/Loss (-)) | 2.4 | -6.2 |
3. | Change in Foreign Exchange Reserves on BoP basis (i.e., Excluding Valuation Effects) | -12.8 | 3.8 |
4. | Percentage of increase/decline in Reserves explained by Valuation Gain/Loss | -23.1 | 262.7 |
Note: Increase in reserves (+)/Decrease in reserves (-). | |||
The valuation loss, reflecting the appreciation of the US dollar against major currencies, amounted to US$ 6.2 billion during 2012-13 as against a valuation gain of US$ 2.4 billion during the preceding year.
Alpana Killawala
Chief General Manager
Press Release : 2012-2013/2185
Foreign exchange reserves variation: valuation losses offset BoP inflows, producing a nominal reserve decline. India's foreign exchange reserves in 2012-13 declined nominally due to a valuation loss despite higher net capital inflows-driven by portfolio investment and short-term trade credit-while the balance of payments (excluding valuation effects) registered an increase, indicating valuation changes reversed the BoP-based improvement. of Press 'Enter' after typing page number.
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