India’s import cover of forex reserves has elevated to a robust 12 months shown by a report from Reserve Bank of India (RBI) as the end of September 2016. At the end of March 2016, It was little lower at 10.9 months.
The number of months of import equivalent to stock or reserve of foreign currency is the Import cover. Based on the trade, it is a traditional indicator of reserve sufficiency. In between March end and September end of 2013, there was last seen falling the import cover to as low as 6.6 months. In every half yearly period recorded from then, the import cover has only improved subsequently after that low.
The sufficiency of forex reserves which has shown by other ratios has shown improvement as well. From 23.1% in March end 2016 to 21.8% in September end 2016, the ratio of short-term debt to foreign exchange reserves has fallen shown by a half yearly report made by RBI.
On September end 2016, 557.77 tonnes of gold are in RBI reserve which is the same as March end 2016 figure. 265.49 tonnes are safely kept with the Bank of England and the Bank for International Settlements (BIS), out of these gold holdings.
On September end 2016 the value of gold as a share of total forex in US dollars was 5.75%. From 5.6% in March end 2016, this was an increment. End of September 2016, the total forex assets were at $346.7 billion which was at a slightly less $336.1 billion in March end 2016. Out of the total forex assets, a large chunk of $229 billion was invested in securities; with the BIS, the IMF and other central banks $97.5 billion was safe. The rest $22 billion dollars were the holdings of the international divisions of banks trading from the commercial perspective.