Indian Foreign reserves fall by $1 billion to $399 billion in one week.

[hiseen]

USA has foreign outflow of about $500 billion a year and yet USA is not becoming bankrupt. The foreign inflows in the form of investment in treasury bonds match the outflow. Even in case of India, foreign investment into Indian economy matches the outflow.

Now, RBI has about 20-25 billion dollar worth of forwards which also must be added to reserves and hence reserves will come to about $420 billion reserves. These forwards are a form of premature payments to imports and done via EXIM banks to increase value of rupee. This means that the imports need not be paid in the future as it already has been paid up. The export earning and remittance will continue coming in the meantime which will then bring back the reserves to its actual level of $420 billion.

US Printing dollar~~~IN Printed ruble~~~~~~~~

 

[Vijyes Yechury]

Okay if companies are coming into India why is foreign reserves falling? Why is rupee declining these both are signs of.money leaving India not coming in. In macro economics these 2 factors indicate against what you are try to tell me.

Your trade deficit is only $17 billion your imports grew by 25% and exports grew by 19 so there is not much deficit if we look at these figures but the amount by which the reserves are falling and Indian rupee is declining is very high so this means the money is leaving India faster than it is coming in.

Indian currency appreciated in last 4 years because of which it had to depreciate. Rupee was at 68 per dollar in 2013 and it appreciated drastically to 63 due to massive inflow of FDI. But the inflation difference between USA and India remained at 2-3% per annum. The fiscal deficit of India also stayed at 3.5% per annum. So, the inflation difference accounts for the actual value of rupee to be about 8-12% lower than 68 which is about 75 per dollar. So, the depreciation we are seeing is rupee getting to actual value.

This is an economic problem and of a major proportion. Why do reserves fall and rupee declines can explain me this? It only happens when there is a large out flow of money from your economy and it not just exports but investors are leaving India and they are doing it rapidly. You don't put them in news but your reserves and currency situation is clearly stating this.

It is happening because there was artificially large inflow in last years which inflated value of rupee and it no longer could hold. Here is chart of foreign exchange below. See the drastic inflows since 2014:

Indian trade deficit is $75 billion according to last known figures. India dollar reserves with in the whole country stands at $365 billion so this means that deficit to reserve ratio stands at above 20%. This indicate India has reserves for next 5 years and India will lose 20% reserves each year. Now why is rupee depreciating and reserves falling than this 20% Mark per year? Because investment is leaving India. This is the start of an economic recession or Indian Govt is hiding data and not giving actual figures.
Modi govt cannot hide these 2 figures because they are not in their control. If they hide one they reveal the other and if hide other they reveal the first. Currency value and foreign reserves both are linked and they are showing the actual picture of Indian economy. Every previous investors is running as soon as he gets the chance. It is as simple as that.

India is getting remittance of $70 billion and FDI of 60 billion every year. You can't simply speak of trade deficit without considering trade of goods, trade of services, remittance and FDI together.

Modi govt cannot hide these 2 figures because they are not in their control. If they hide one they reveal the other and if hide other they reveal the first. Currency value and foreign reserves both are linked and they are showing the actual picture of Indian economy. Every previous investors is running as soon as he gets the chance. It is as simple as that.

There was no hiding of anything. The fundamentals are strong. Rupee is getting to its actual value as it should. 75 is the right value of rupee. But 72-73 is also acceptable. Lower rupee value only helps useless people to enjoy, not for working ppulation

India is a fake boosted economy actually by media campaign and in actual there are no economic gains in India most of the population is poor and don't have buying or selling power they cannot give business to the investors and rich are ultra rich they can import from other countries the products they want so there is no point for business to invest in India.

No one can boost economy by media campaign. Otherwise everyone would be doing that. Poor population has got nothing to do with anything here. Indian GDP of $2.7 trillion is small compared to the population of 135crore. So, that is accounted for already.

Don't speak stupid theories that rich can import while poor don't buy. The reality is that rich buy from poor as it is of lower price. Rich won't buy from other rich as price will be high.

Nope it will not there is debt of $541 billion on India which you have to pay back that is not a gift it is a loan. $231 billion is due in March 2019. So nothing is good for you bro. Modi did a media campaign with borrowed money to gain few good points but actually he destroyed your economy. It is rainy season ahead.

It is very bad and very sad

https://twitter.com/x/status/1038330955805732864

India has to repay about $80-90 billion as short term loans by Fy2019. 231 billion is a bit outlandish

 

[BHarwana]

https://twitter.com/x/status/1041657563211657216