Foreign exchange reserves are important because dollar in particular is the sing…

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Foreign exchange reserves are important because dollar in particular is the single most demanded currency in the world and most of the foreign trade happens in dollars. Whenever we import anything, the need is to pay in the foreign currency. When we export, we receive foreign currency. A healthy foreign exchange reserve balance is an indicator of a robust financial system. To keep the levels healthy, every govt promotes export and curbs imports by making them expensive. For those of us who had economics in class 11, foreign exchange reserves are reminiscent of the great LPG initiative: Liberalisation, Privatisation and Globalisation taken by the govt in 1991, which served as the backbone of our economic growth in the forthcoming decades. Our foreign exchange reserves were at an all time low of ~15 days use. From there, we have reached a level where we have the 8th largest foreign exchange reserve in the world. A massively underappreciated achievement.
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#money #currency #foreigntrade #foreign #exchange #reserve #bank #dollar #pound #euro #india #china #japan #uae #swiss #russia #soviet #saudiarabia #taiwan #hongkong #korea

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Rishabh Sharma
Rishabh works on independent projects in valuation, funds raising, and divestiture assignments. He is an active value and momentum investor.
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