UPSC Prelims 2013 · Question 33 of 99

UPSC Prelims 2013 question on Foreign Exchange Reserves Composition

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

  1. Foreign-currency assets, Special Drawing Rights (SDRs) and loans from foreign countries
  2. Foreign-currency assets, gold holdings of the RBI and SDRs
  3. Foreign-currency assets, loans from the World Bank and SDRs
  4. Foreign-currency assets, gold holdings of the RBI, and loans from the World Bank
Show answer

Answer: B. Foreign-currency assets, gold holdings of the RBI and SDRs

Analysis

India’s foreign exchange reserves mainly consist of Foreign Currency Assets (FCA), gold reserves, Special Drawing Rights (SDRs), and Reserve Tranche Position (RTP) with the International Monetary Fund (IMF). Loans from foreign countries or the World Bank are not treated as components of forex reserves. Therefore, the correct combination includes foreign currency assets, gold holdings of RBI, and SDRs.

Extra UPSC info

Foreign exchange reserves help maintain external stability and support the value of the Indian Rupee.

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