This section needs additional citations for verification. In a strict sense, foreign-exchange reserves should only include foreign india forex reserves data, foreign bank deposits, foreign treasury bills, india forex reserves historical data short and long-term foreign government securities.
Foreign-exchange reserves are called reserve assets in the balance of payments and are located in the capital account. Theoretically, in this case reserves are not necessary. Non-sterilization will cause an expansion or contraction in the amount of domestic currency in circulation, and hence directly affect inflation and monetary policy. For example, to maintain the same exchange rate if there is increased demand, the central bank can issue more of the domestic currency and purchase foreign currency, which will increase the sum of foreign reserves. Thus, intervention does not mean that they are defending a specific exchange rate level.
However, the opposite happened and foreign reserves present a strong upward trend. Ratios relating reserves to other external sector variables are popular among credit risk agencies and international organizations to assess the external vulnerability of a country. Reserves are used as savings for potential times of crises, especially balance of payments crises. Original fears were related to the current account, but this gradually changed to also include financial account needs. Historical data by country and selected topics are also available. On March 29, 2000, the Fund’s Executive Board approved both the establishment of a common database for the collection of template data disseminated by SDDS subscribing countries and the re-dissemination of these data through the Fund’s external website. Countries participating in this endeavor do so on a voluntary basis.