Forex for a trader
Forex reserves

Forex reservesU. S. dollar share of global currency reserves fall further - IMF. (Reuters) - The U. S. dollar’s share of currency reserves reported to the International Monetary Fund fell in first quarter of 2018 to a fresh four-year low, while euro, yuan and sterling’s shares of reserves increased, according to the latest data from the International Monetary Fund. The share of dollar reserves shrank for five consecutive quarters as the greenback weakened in the first three months of 2018 on expectations faster growth outside the United States and bets that other major central banks would consider reducing stimulus. Still the dollar has remained the biggest reserve currency by far. However, the dollar strengthened in the second quarter on fears about a global trade war and the European Central Bank signalling it would not raise interest rates until latter half of 2019. Global reserves are assets of central banks held in different currencies, mainly used to support their liabilities. Central banks sometimes have used reserves to help support their respective currencies. Reserves held in U. S. dollars climbed to $6.499 trillion, or 62.48 percent of allocated reserves, in the first quarter. This compared with $6.282 trillion, or 62.72 percent of allocated reserves, in the fourth quarter of 2017. The share of U. S. dollar reserves contracted to its smallest level since reaching 61.24 percent in the fourth quarter of 2013, IMF data released late on Friday showed. Ranked second behind the greenback, the euro’s share of global reserves reached 20.39 percent in the fourth quarter, up from 20.15 percent in the fourth quarter. This was its largest share since the final quarter of 2014, but well below the single currency’s peak share of reserves at 28 percent in 2009. China’s share of allocated currency reserves increased for a third straight quarter to 1.39 percent.

The IMF had reported the yuan’s share of central bank holdings for the first time in the fourth quarter of 2016. Sterling’s share of currency reserves moved up to 4.68 percent in the first quarter, the biggest since the fourth quarter of 2015, IMF data showed. The yen’s share of currency reserves retreated to 4.81 percent from prior quarter’s 4.89 percent, which was its biggest since the fourth quarter of 2002. Reporting by Richard Leong; Editing by Lisa Shumaker. Foreign Exchange Reserves. What is 'Foreign Exchange Reserves' Foreign exchange reserves are assets held on reserve by a central bank in foreign currencies. BREAKING DOWN 'Foreign Exchange Reserves' Foreign exchange reserves are used to back liabilities and influence monetary policy. This refers to any foreign money held by a central bank, such as the United States Federal Reserve Bank. These reserves can include banknotes, deposits, bonds, treasury bills and other governmental securities. These assets serve many purposes but are most significantly held to ensure that a central government agency has backup funds if their national currency rapidly devalues or becomes all together insolvent. It is a common practice in countries around the world for their central bank to hold a significant amount of reserves in their foreign exchange. Most of these reserves are held in the U. S. dollar, since it is the most traded currency in the world.

It is not uncommon for the foreign exchange reserves to be made up of the British Pound (GBP), the Euro (EUR), the Chinese yuan (CNY) or the Japanese yen (JPY) as well. Economists theorize that it is better to hold the foreign exchange reserves in a currency that is not directly connected to the country’s own currency in order to provide a barrier should there be a market shock. However, this practice has become more difficult as currencies have become more intertwined as global trading has become easier. Foreign Exchange Reserves Around the World. The world's largest current foreign exchange reserve holder is China, a country holding more than 3.5 trillion of their assets in a foreign currency. Most of their reserves are held in the U. S. dollar. One of the reasons for this is that it makes international trade easier to execute since most of the trading takes place using the U. S. dollar. Saudi Arabia also holds considerable foreign exchange reserves, as the country relies mainly on the export of their vast oil reserves. If oil prices begin to rapidly drop, their economy could suffer.

They keep large amounts of foreign funds in reserves to act as a cushion should this happen, even if it’s only a temporary fix. US Search Mobile Web. Welcome to the Yahoo Search forum! We’d love to hear your ideas on how to improve Yahoo Search . The Yahoo product feedback forum now requires a valid Yahoo ID and password to participate. You are now required to sign-in using your Yahoo email account in order to provide us with feedback and to submit votes and comments to existing ideas. If you do not have a Yahoo ID or the password to your Yahoo ID, please sign-up for a new account. If you have a valid Yahoo ID and password, follow these steps if you would like to remove your posts, comments, votes, andor profile from the Yahoo product feedback forum. Worrying signs on the forex reserves front. Forex pressure The Centre must look to boost exports and cut down imports - iStockphoto. Jaitley: Govt monitoring the current exchange rate market. Widening trade deficit, sluggish export growth could put further pressure on the country’s forex reserves. The Centre’s response to the recent bout of weakness in the rupee has been surprisingly nonchalant. While the RBI was mum, the Finance Minister decided to talk up the rupee by tweeting that India’s foreign exchange reserves are comfortable, going by global standards and sufficient to mitigate any undue volatility in the foreign exchange market.

The Finance Minister is partially right, for the country’s reserves are better than many other emerging economies. But given the changing global liquidity conditions and their impact on the FDI and FPI flows in to the country, it might not be right to feel complacent about the country’s reserves. Also given the structural issues in the country’s external account — widening trade deficit, sluggish export growth and growing imports — our forex arsenal is likely to be under further threat in the coming quarters. It would therefore be better to acknowledge the challenges and think about corrective action rather than be in denial. After the 2013 crisis in the rupee when the taper tantrum and the widening current account deficit, eroded the reserves, the RBI has been careful about building its forex reserves. Reserves had therefore increased from $275 billion in September 2013 to the life-time high of $426 billion in April 2018. Strong inflows from foreign portfolio investors as well as foreign direct investors in the interim period helped to a large extent in shoring up reserves. But this support is likely to be withdrawn in the coming quarters. Foreign direct inflows had been robust in the first two years of NDA rule, growing at 25 per cent and 23 per cent in FY15 and FY16 as Prime Minister Narendra Modi reached out to overseas investors to fund the country’s growth. But the momentum has slowed down since then with the FDI inflows growing 8 per cent in FY17 and at an even slower pace of 3 per cent in FY18. The cushion provided by FII inflows is also likely to reduce. Foreign institutional investors have withdrawn ?15,771 crore from the equity market for far in FY 19 while the outflows from debt segment has been ?35,449 crore. This is contrary to the copious inflows of ?1,44,682 crore in equity and debt markets in FY 18 when a rallying stock market and appreciating rupee had attracted foreign investors to Indian markets. While the reduction in foreign inflows makes it difficult for the RBI to mop up reserves, it has also had to sell dollars to stave off a sharp depreciation in rupee.

In the three months from April to June 2018, the RBI has net sold $14 billion. It is therefore not surprising that the reserves are down 10 per cent from their peak level recorded in April. The Fed’s action. Reduction in foreign money inflows in to the country is a function of the global liquidity conditions and everyone knows that these are far from conducive lately. After pumping in trillions of dollars since the 2008 crisis, the Federal Reserve began shrinking its balance sheet since October 2017. While this is reducing liquidity in global markets, the rate hikes from the Fed are making the cost of financing expensive. It is therefore not surprising that global investors have less to spend and are reducing their investments in emerging markets including India. RBI Governor Urjit Patel acknowledged this problem in a recent column in Financial Times , through which he had appealed to the Federal Reserve to go slow on its monetary tightening. The IMF estimates that the Fed’s tightening can result in reducing flows into emerging markets by $35 billion a year. It’s therefore apparent that the world is moving from a period of easy money to one were liquidity becomes tighter and funds become more expensive. The widespread belief that the cover provided by forex reserves to imports is comfortable, is debatable too. While the current import cover is much higher than the 7-month cover in 2013, continued deterioration in trade deficit can mar this number. While the import cover was 11.1 in April 2018, it is already down to 9.9 in August. The other data that reflect adequacy of reserves is the country’s external debt. Due the excessive liquidity in global markets after 2008, the country’s external debt has doubled from $224 billion in 2008 to $529 billion now. Indian companies have made the most of the easy liquidity conditions overseas, increasing the non-government portion of external debt to almost 80 per cent. External commercial borrowings account for over one-third of the country’s debt.

The cover provided by forex reserves to external debt has deteriorated significantly in this period from 138 per cent in 2008 to 80 per cent now. Another factor that is worth noting is that the share of concessional debt from multilateral agencies has been coming down over the years — from 46 per cent in 1991 to 20 per cent in 2008 to 9 per cent in 2018. The worrying factor is that short-term debt on a residual maturity basis that include long-term debt falling due over the next 12 months and short-term debt by original maturity, account for 42 per cent of total external debt towards the end of March 2018 and stood at 52.3 per cent of foreign exchange reserves. With central banks including the Federal Reserve and the Bank of England hiking rates, the cost of refinancing these loans is going to become difficult, leading to repayment of some of these loans, causing forex outgo. There are however no short-term fixes to this problem. While the measures taken to improve the ease of doing business and the implementation of GST will improve FDI flows in the long term and foreign investment flows will improve once the global liquidity conditions improve, addressing the structural trade imbalance will take longer. The government needs to renew the efforts initiated in the initial period of its term to boost exports and reduce dependence on imports in order to ensure a sustained improvement in the country’s reserves. Forex reserves up by $24.34 billion to $424.55 billion in H2 FY18. ADD TO PORTFOLIO. ADD TO WATCHLIST. SHARE YOUR OULOOK. India's foreign exchange reserves increased by $24.34 billion to $424.55 billion as of end March 2018 from $400.21 billion as of end September 2017, Reserve Bank said. During September 2017 and March 2018, reserves decreased to $399.23 billion as of end October 2017, increased to $401.94 billion as at end November 2017, $409.07 billion as of end December 2017, $422.37 billion as of end January 2018 and $420.96 billion as of end February 2018.

"At the end of December 2017, the import cover decreased to 10.8 months from 11.3 months at end March 2017," RBI said in its half yearly report on management of foreign exchange reserves released today. The foreign exchange reserves, when reckoned on balance of payment (BoP) basis (excluding valuation effects), increased by $30.3 billion during April-December 2017 as compared with an increase of $14.2 billion during April-December 2016. The foreign exchange reserves in nominal terms (including valuation effects) increased by $39.1 billion during April-December 2017 as against the depletion of $1.3 billion during the same period of the preceding year. The ratio of short-term debt to foreign exchange reserves, which was 23.8 per cent at end March 2017, remained at the same level at end December 2017, the report said. RBI holds 560.32 tonnes of gold, of which 268.01 tonnes are held overseas in safe custody with the Bank of England and the Bank for International Settlements (BIS). Gold as a share of the total foreign exchange reserves in value terms (USD) stood at about 5 per cent as of end March 2018. Indias net International Investment Position (IIP), as of end December 2017 was negative at $429.7 billion, implying that the sum of all external liabilities is more than that of the external assets. IIP is a summary record of the stock of the countrys external financial assets and liabilities. Forex Reserves Decline By Over $25 Billion Since April Peak. The rupee had on Thursday closed at a historic low of 70.15 to the dollar. The RBI attributed the drop in forex reserves to a steep fall in the foreign currency assets.

Mumbai : The country's forex reserves have declined by $25.147 billion between April 13 and August 10, with the rupee on a downward spiral since the beginning of the year forcing the Reserve Bank of India to sell dollars to defend the local currency. The forex reserves had touched a record high of $426.028 billion in the week to April 13, 2018 and plunged to a low of $400.88 billion in the week to August 10, losing a whopping $1.822 billion within a week, according to RBI data. The central bank attributed the drop to a steep fall in the foreign currency assets. Though officially the RBI does not maintain the rupee at a determined level, the massive fall in the reserves clearly shows that the central bank has been selling the greenback to prop up the domestic currency. The rupee had on Thursday closed at a historic low of 70.15 against the dollar. It had touched an intraday low of 70.40 against the dollar on Thursday, making it one of the worst performing emerging market currencies. The rupee has lost over 9 per cent since January this year. The currency market was closed on Friday for Parsi New Year. In the previous week, the reserves had dipped by $1.489 billion to $402.703 billion, as per the RBI data. Since April 13 till Friday, the country's reserves have been depleted by $25.14 billion due to the RBI's intervention in the foreign exchange market. The Reserve Bank of India has been heavily intervening in the market, as it has been a net seller of the US currency between April and June. The monetary authority has sold a massive $14.434 billion of the US currency on a net basis in the three months in the spot market. In the week to August 10, the foreign currency assets, a major component of the overall reserves, plummeted by $1.949 billion to $376.265 billion, as per the latest data from the central bank. Expressed in US dollar terms, foreign currency assets include the effect of appreciationdepreciation of the non-US currencies such as the euro, pound and the yen held in the reserves. However, gold reserves rose by $145.6 million to $20.691 billion in the reporting week.

The special drawing rights with the International Monetary Fund (IMF) dipped by $9.2 million to $1.466 billion. The country's reserve position with the IMF also declined by $9.2 million to $2.458 billion, the central bank said. India's forex reserves may fall below $400 billion mark. With the rupee coming under severe pressure due to meltdown in the Turkish lira, India's foreign exchange reserves has come within striking distance of falling below the $400 billion mark. Reserve Bank of India data showed that reserves fell $1.8 billion in the week to August 10 to $400.88 billion. Foreign exchange dealers said that RBI was seen selling dollars to prevent the local currency from falling freely. The country's trade deficit hit a 5-year high of $18.02 billion in July, putting added pressure on the local currency. It has fallen about $26 billion from the record high level of $426.082 billion seen on April 13. RBI sold $14.4 billion in first quarter of the year as against a cumulative purchase of $8.8 billion in the corresponding quarter last year, Care Ratings said in a research note. Foreign investment flows, however, turned positive after being negative in the first three months of the year. The debt and equity markets saw $941 million inflows in August so far, Care Ratings said. Still have a question? Ask your own! Foreign exchange reserve can be defined as deposits of a foreign currency held by the central bank of a country. Here are some of the reasons why it is important for a country to have good amount of foreign exchange reserves – 1. It increases the confidence in the monetary and exchange rate policies of the government. 2. It enhances the capacity of the central bank of the country to intervene in the foreign exchange market and control any adverse movement and stabilize the foreign exchange rates to provide a more favorable economic environment for the progress of the country. 3. During time of any crisis foreign exchange reserves come to the rescue of any country so as to absorb the distress related to such crisis.

4. It also adds to the comfort of market participants that domestic currency is backed by external assets and hence it also helps the equity markets of the country, because due to strong reserves many people from foreign countries are willing to invest in the country having strong foreign exchange reserves. However holding too much foreign exchange reserves is also not advisable because it involves the opportunity cost of money tied in reserves rather than investing somewhere else which could have earn higher return on the invested amount. For any Legal and Accounting support, Happy to help you, let us talk at Wazzeer - Smart Platform for Legal, Accounting & Compliance services. Mapped: The Countries With the Most Foreign Currency Reserves. In the high stakes game of international trade, holding onto a stockpile of foreign cash gives you options. Forex reserves can help buoy the local currency or even provide much-needed insurance in the case of a national economic emergency. And when reserves are plentiful, a country can even use them to wield influence on international affairs – after all, most financial assets are simultaneously someone else’s liability. Forex Reserves by Country. Today’s infographic comes to us from HowMuch. net, and it resizes countries on a world map based on their foreign currency reserves, according to the most recent IMF data.

Here is a list of the top 10 countries – China tops the list with a solid $3.2 trillion in reserves held: The first thing you may gather from this list is that major economies like the U. S. and Europe are noticeably absent, but that is because the U. S. dollar and the euro are the most common reserve currencies used in international transactions. As a result, countries such as the United States do not need to hold as many reserves. To put this all into context, here is what central banks reported in 2017 Q3 for their foreign currency holdings: Interestingly, the Japanese yen has decent acceptance as a reserve currency, but the country still holds the second highest amount of foreign currency reserves ($1.2 trillion) anyways. This is partially because Japan is an export powerhouse, sending $605 billion of exports abroad every year. Why Hold Foreign Currency Reserves? And now, a practical question: why do these countries hold foreign currency reserves in the first place? Here are seven reasons, as originally noted by The Balance: Forex reserves allow a country to maintain the value of their domestic currency at a fixed rate Countries with floating exchange rates can buy up foreign currencies or financial instruments to reduce the value of their domestic currency Forex reserves can help maintain liquidity during an economic crisis Reserves can provide confidence to foreign investors, showing that the central bank has the ability to take action to protect their investments Foreign currency reserves give a country extra insurance in meeting external payment obligations Forex reserves can be used to fund certain sectors, like building infrastructure They also provide a means of diversification, which allows central banks to reduce the risk of their overall portfolios. US Search Mobile Web. Welcome to the Yahoo Search forum! We’d love to hear your ideas on how to improve Yahoo Search . The Yahoo product feedback forum now requires a valid Yahoo ID and password to participate. You are now required to sign-in using your Yahoo email account in order to provide us with feedback and to submit votes and comments to existing ideas. If you do not have a Yahoo ID or the password to your Yahoo ID, please sign-up for a new account. If you have a valid Yahoo ID and password, follow these steps if you would like to remove your posts, comments, votes, andor profile from the Yahoo product feedback forum.


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