Foreign exchange reserves of india | India's Foreign exchange reserves

Normal definition of Foreign exchange reserves says that it is the sum of foreign currency deposits and bonds held by the central bank of a country. But in popular terms it includes gold, Special Drawing Rights (SDRs) and Reserve Tranche Position of IMF also.Foreign exchange reserves enable nations to participate within the global marketplace and transact official business,to coordinate trade policy and improve their domestic economy.Foreign exchange reserves do not earn high rates of return as investments, and may even lose value when currency rates shift unfavorably. Domestic consumers are adversely affected by low exchange rates. Low exchange rates for the Indian Rupee are inflationary because imported goods become more expensive. RBI may then spend foreign exchange reserves to buy domestic currency and strengthen its value--when low exchange rates and inflation are concerns. Last week RBI sold dollars to arrest rupee's slide.

Foreign exchange reserves of India (A s of September 9, 2011 )
The Foreign exchange reserves of india consists of below four categories.
(a) Foreign Currency Assets - 280 Billion
(b) Gold - 28 Billion
(c) SDRs - 4.5 Billion
(d) Reserve Position in the IMF - 2.9 Billion
(e) Total - 316.5 Billion 

Foreign Currency Assets
Foreign currency assets expressed in US dollar terms include the effect of appreciation/depreciation of non-US currencies (such as Euro, Sterling, Yen) held in reserves.

Special Drawing Rights
Special Drawing Rights (SDRs) are supplementary foreign exchange reserve assets defined and maintained by the International Monetary Fund. It was created in 1969 to supplement a shortfall of preferred foreign exchange reserve assets, namely gold and the US dollar, the SDR's value is defined by a weighted currency basket of four major currencies: the Euro, the US dollar, the British pound, and the Japanese yenCurrently, the value of one SDR is equal to the sum of 0.423 Euros, 12.1 Yen, 0.111 pounds, and 0.66 US Dollars. This basket is re-evaluated every five years,and the currencies included as well as the weights given to them can then change.

Reserve Tranche Position
The primary means of financing the International Monetary Fund is through members' quotas. Each member of the IMF is assigned a quota, part of which is payable in SDRs or specified usable currencies ("reserve assets"), and part in the member's own currency. The difference between a member's quota and the IMF's holdings of its currency is a country's Reserve Tranche Position (RTP).Reserve Tranche Position is accounted among a country's Foreign Exchange Reserves.