what is FOREX [foreign exchange] Reserves??

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        What is Forex Reserves.             It's under Central bank or other monetary authority that are primarily available to balance payments of the country. This is an external assets of the country. This is  cash and other reserve assets. It influences the foreign exchange rate of its currency and maintain confidence in financial markets. 
                 Most nations hold the vast majority of their foreign currency reserves in U.S Dollars followed by Euros.

                  Foreign currency reserves are crucial to a nation's economic well-being. Without enough reserves country may be unable to pay for critical imports in critical situation; such as crude oil etc. 
             In 1991; we had only so  forex reserves that was enough  for only 10 days imports. 
              Forex reserves have only four component. 
*   Foreign currency Assets - Most important asset  [in amount ] is foreign currency. [like US dollars ].
*  Gold-  countries save gold as forex reserves in critical time of nation for imports or other needy works.
*  Special Drawing Rights -  Total member in IMF is 189.IMF allot quotas for all countries on the basis of their [1] GDP(50%) [2] openness [in term of economy](30%) [3] Exonomic variability (15%) [4] International reserves(5%).

*  Reserve Tranche Position - It is also related to IMF. IMF allots quotas . 
 Part of the quota can be withdrawn from the IMF without any interest during critical situations of a country crises. This part of the money which can be withdrawn without any interest is the RTP.

  FOREX RESERVS OF INDIA
     
      India's forex reserves  has gained all time high of above $500 billion (approx $507.644 billion on 12thof june). 
   foreign exchange assets (FCA) component at around US$468.737 billion, gold reserves at around US$33.173billion, SDRs (Special Drawing Rights with the IMF) of around US$1.454 billion and around US$4.280 billion reserve position.

   What is the  Reason behind it -  you must  be [thinking that in this lockdown how is this increasing. There is few point which will give you a clear  understanding. 

  *  Increase in FDI [Foreign Direct Investment ] - For the past few years fdi has increased rapidly. It is still increasing . 

   * Net inflow of funds by FPIs[Foreign portfolio Investment] - Fpi has also increased. 

   * Sharp decline in import expenditure - Due to wuhan virus import of our country dramatically low. So  we have saved more dollars from it. 

   * Sharp decline in global crude oil prices - Due to lockdown globally ;crude oil prices have decreased. Few days back crude oil prices decreased less than 20 dollars per barrel .
   
         Thank you for reading this. I hope that it Will give you a clear understanding about forex reserves. 
     
                                -Pratham shankhdhar

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