Question

Which one of the following groups of items is included in India’s foreign-exchange reserves?

(a) Foreign-currency assets, Special Drawing Rights (SDRs) and loans from foreign countries

(b) Foreign-currency assets, gold holdings of the RBI and SDR’s

(c) Foreign-currency assets, loans from the World Bank and SDRs

(d) Foreign-currency assets, gold holdings of the RBI and loans from the World Bank

Answer 1

(b) In India’s foreign exchange reserve, it includes foreign currency deposits, bonds, gold reserves, SDRs and IMF reserve position. Foreign exchange reserves are an important part of the international investment position of a country.