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Background
The Reserve Bank of India (RBI)
had, on January 31, 2003, issued a Press Note on conclusions of a study conducted
by its Department of Economic Analysis and Policy (DEAP) on Sources of Accretion
to Foreign Exchange Reserves during April-November 2002. Subsequent to this,
the RBI has been regularly updating and releasing information on ‘Sources of
Accretion to Foreign Exchange Reserves’ through press releases which are available
on the RBI website (www.rbi.org.in).
Balance
of payments (BoP) data for the year 2005-06 are now available. These data
have been released on RBI website (www.rbi.org.in)
on June 30, 2006.
Sources of Accretion to Foreign
Exchange Reserves 2005-06
The following table shows the main
components of accretion to foreign exchange reserves during April-March 2005-06:
Table 1: Sources of Accretion to
Foreign Exchange Reserves
(US $ billion)
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Items
|
April-March
2005-06
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April-March
2004-05
|
|
I.
|
|
Current Account Balance
|
-10.6
|
-5.4
|
|
II.
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Capital Account (net) (a to f)
|
25.7
|
31.6
|
| |
a.
|
Foreign Investment
|
18.2
|
12.2
|
| |
b.
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Banking Capital
|
1.4
|
3.9
|
| |
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Of which: NRI Deposits
|
2.8
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-1.0
|
| |
c.
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Short term credit
|
1.7
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3.8
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| |
d.
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External Assistance
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1.4
|
1.9
|
| |
e.
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External Commercial Borrowings
|
1.6
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5.0
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| |
f.
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Other items in capital account
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1.4
|
4.8
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III.
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Valuation change
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-5.0
|
2.4
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| |
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Total (I+II+III)
|
10.1
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28.6
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Major sources of accretion to foreign
exchange reserves during the year 2005-06 have been foreign investment, short-term
credit and External Commercial Borrowing (ECB). The accretion to the foreign
exchange reserves was of the order of US $ 15.1 billion on a BoP basis (excluding
valuation effects) during 2005-06. Valuation loss, reflecting the depreciation
of major currencies against the US dollar, accounted for a decline of US $ 5.0
billion in total reserves during 2005-06 as against a valuation gain of US $
2.4 billion during 2004-05. Taking into account the valuation loss of US $ 5.0
billion, foreign exchange reserves recorded an increase of US $ 10.1 billion
during 2005-06 (an increase of US $ 28.6 billion during 2004-05).
Alpana Killawala
Chief General Manager
Press Release : 2005-2006/1709
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