Bhakri Suman, Verma Aman


Foreign exchange reserves received considerable attention among the developing economies with the opening up of these economies after 1991 new economic reforms. The importance of managing the foreign exchange reserves gathered momentum over the years due to increase in capital inflows in the form of investments, expanding trade activities and external commercial borrowings (ECBs). According to International Monetary Fund (Balance of Payments Manual, and Guidelines on Foreign Exchange Reserve Management, 2001), which defines reserves as “external assets that are readily available to and controlled by monetary authorities for direct financing of external payments imbalances, for indirectly regulating the magnitudes of such imbalances through intervention in exchange markets to affect the currency exchange rate, and/or for other purposes” (Bhakri and Verma, 2020). Foreign exchange reserves (FER) are also maintained in order to meet uncertainties in a country. It is regulated and managed by the various countries’ central banks. The current paper has focused on the trends in various macroeconomic indicators of foreign exchange reserves in India. The  paper has emphasized on the analysis of four policy periods namely, Liberalization, Globalization, World Recovery and Global financial crises and their impact on foreign exchange reserves. It will be using semi log growth equation model with dummy variables to find out the growth rates in various macroeconomic indicators for different policy periods (Bhakri and Verma, 2020). The ten variables namely, total exports, oil import, food import, other import, total imports, inflow of foreign direct investment, external commercial borrowings, total external debt, short term foreign external debt( as a % of total debt) and debt repayments, are being considered for the analysis.


Foreign Exchange Reserves (FER), External Commercial Borrowings (ECBs), Liberalization, Globalization, World Recovery, Foreign Direct Investment (FDI), Oil Import, Food Import, Other Import.

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