International Forex reserves are used to settle balance of payments deficits between countries. International reserves are made up of foreign currency assets, gold, holdings of SDRs and reserve position in the IMF.
Usually includes foreign currencies themselves, other assets denominated in foreign currencies, and particular amount of special drawing rights (SDRs).A foreign exchange reserve is a useful precaution for countries exposed to financial crises. It can be used for the purpose of intervening in the exchange market to influence or peg the exchange rate.
Indian FOREIGN EXCHANGE RESERVES (in million U.S. dollars)
|Jan 2013||Jan 2012||Jan 2011|
|Foreign currency assets||262,276||261,062||258,801|
|Reserve Tranche Position||2,324||2,307||2,694|
Special drawing rights (SDRs) are international reserve assets created by international Monetary Fund to supplement other reserve assets that periodically have been allocated to IMF members in proportion to their respective quotas. SDRs are not considered liabilities of the Fund, and IMF members to whom SDRs are allocated do not incur actual (unconditional) liabilities to repay SDR allocations.
The fund determines the value of SDRs daily by summing, in USA dollars, the values of a weighted basket of currencies. The weight and baskets are subject to revision from time to time. SDRs can be used to acquire other member’s currencies (foreign exchange), to settle financial obligations, and to extend loans.