Indian Foreign Exchange Reserves Hit Record High of $322 billion! Globally #9!

[Storm Force]

Lets keep our Financially strength HUSH HUSH our hosts of the forum do not need know this

 

[Echo_419]

If may I ask what it actually mean ?
Wh as the is surplus ?
How it will help our trade and economy?
Do common man benefits ? 300+ bil dollars can be used on infra and defence ?

Nope only for Foreign Purchases

 

[thesolar65]

See, I always tell my friends who criticizes me but comes to me when they are in need. "Kanjoos hona bhi acchha hota hai"!!...

 

[Ind4Ever]

Nope only for Foreign Purchases

Includes weapons ?

 

[A$HU]

Includes weapons ?

Yes,basically for any transaction with foreign countries where medium of payment is dollar(which is in almost 99% of the cases).

 

[anant_s]

If may I ask what it actually mean ?
Wh as the is surplus ?
How it will help our trade and economy?
Do common man benefits ? 300+ bil dollars can be used on infra and defence ?

Well brother u need to understand a couple of things here.
First of all balance of trade. this simply means difference in Exports (material, services etc) and imports. If exports exceed Imports, you have a favorable Balance of trade.
Now comes Current Account which consists of Balance of trade adding (net) income and other payments received (example NRIs sending money).
Now if a country has a capacity to sustain or pay for all the imports, sustain investment (ex. pay for new schemes and projects), essentially the spending, Current account is said to be in balance. If you still have some money left, You have current account Surplus and if you are in debt, that is Deficit.

Now to quote some examples, In India largest share of money for import goes towards import of crude & Gold. Now you can't do much about crude but last year when situation was desperate govt. imposed an import duty on Gold, making it costlier for a person to own gold and essentially discourage gold imports reducing overall trade bill. Also RBI came up with schemes to attract dollars and buildup reserve (FOREX reserve).
This year as crude prices have eased, our import bills have further gone down making the deficit even smaller. if the trend continues and we are able to ramp our exports, the net balance would turn positive meaning we'll have net gain after all spending and earnings are taken care off.

I hope i made some sense for you.

 

[Ind4Ever]

Well brother u need to understand a couple of things here.
First of all balance of trade. this simply means difference in Exports (material, services etc) and imports. If exports exceed Imports, you have a favorable Balance of trade.

so what is our current difference ? Obviously we should be importing more ?

Now comes Current Account which consists of Balance of trade adding (net) income and other payments received (example NRIs sending money).
Now if a country has a capacity to sustain or pay for all the imports, sustain investment (ex. pay for new schemes and projects), essentially the spending, Current account is said to be in balance. If you still have some money left, You have current account Surplus and if you are in debt, that is Deficit.

So it means we have 300+ more money to spend on new projects ?

Now to quote some examples, In India largest share of money for import goes towards import of crude & Gold. Now you can't do much about crude but last year when situation was desperate govt. imposed an import duty on Gold, making it costlier for a person to own gold and essentially discourage gold imports reducing overall trade bill. Also RBI came up with schemes to attract dollars and buildup reserve (FOREX reserve).
This year as crude prices have eased, our import bills have further gone down making the deficit even smaller. if the trend continues and we are able to ramp our exports, the net balance would turn positive meaning we'll have net gain after all spending and earnings are taken care off.

I hope i made some sense for you.

Got it . Thanks brother

 

[farhan_9909]

iskay peechay raaz?

 

[Ind4Ever]

Is there any risk of buying more dollars ? It might slow /even dip into ressesion . Then ll it affect our economy ? Buying gold we ill always be a good investment as it's value ll increase for sure .

 

[sree45]

So it means we have 300+ more money to spend on new projects ?

Forex kitty swells to hit a record but still RBI shouldn't use it to fund infra

iskay peechay raaz?

India’s Current Account to swing into surplus for the first time since 2004 - Moneylife

 

[anant_s]

iskay peechay raaz?

Mostly fiscal prudence, some good policies from RBI and falling crude prices. Also we must be thankful to Saudi Arabia and OPEC in general that didnot resort to crude oil production cuts and that has helped immensely.
Also you might be interested to know that during last few years when most economies were going through crisis and resorting to extremely low Interest rate to boost investment and economy, our central bank did reverse and kept cranking up interest rates. The result, while industry had suffered (not much businesses opening), economy consolidated a lot. Today with lot of macro-economic factors in favor and government having good room to maneuver, a lot of investment is coming to India and RBI may soon start cutting rates improving business environment even further.

So it means we have 300+ more money to spend on new projects ?

the value written USD 320+ billion dollars is actually the Forex reserves, that is usually used to finance everything from imports, foreign services even our defence purchases.
As for our account balance since 1993 (start of liberalization) till date is as follows

 

[HRK]

Do common man benefits ?

for a common man stable & healthy Forex reserve of a country act as a barrier against 'Imported Inflation' due to exchange rate difference, hence bring stability in price or in other words 'inflation' & inflation is one of the determining factors of 'interest rate' (not the only factor), so the stability of inflation rates effect the stability of interest rates and stable interest rates help in the 'growth of business' which translate in the overall growth of 'GDP' of the country higher growth of GDP help to raise the living standard of COMMON MAN

In short stable Forex reserve is helpful for a 'common man' from micro to macro economic level.

 

[13 komaun]

Increasing the share of manufacturing to 25% and initiatives like Make In India,F.T.A in services will further increase the forex of nation i hope it reach $1 trillion by 2025

so what is our current difference ? Obviously we should be importing more ?


So it means we have 300+ more money to spend on new projects ?


Got it . Thanks brother

Economic Survey 2012: Ch6-Balance of Trade BoP

 

[Nan Yang]

Market players said RBI has been buying dollars to ensure that the rupee stays strong. The Indian currency closed at 61.44 to a dollar on Friday.​

I am not an economist but that statement is incorrect. You do not make rupee strong by buying dollars.
If you buy dollars you are making the dollar stronger.

 

[cirr]

buying dollars to ensure that the rupee stays strong？

Interesting tactic。

I suppose that，of all people，only our Indian friends can pull off this one。