Which of the following best describes the term ‘import cover’, sometimes seen in the news?
Explanation:
Foreign currency reserves (months of import coverage) The stock of foreign exchange reserves in terms of months of retained imports of goods as at end of year. It measures the number of months of money available in the national bank to cover the cost of imports.
Why the question Came:
India’s import cover improved to 10.9 months at the end of March 2016, from 9.8 months at end-September 2015, as the country’s reserves improved about $10 billion in the period, the Reserve Bank of India (RBI) said in its half yearly report on foreign exchange reserves. The Economic Survey also talked in detail about India’s Forex Reserves and the Import cover was analyzed. FM too spoke about this. In the light of volatile world economic situation, this is important.
Sources:
The Economic Survey 2016-17, RBI Reports
- It is the ratio of value of imports to the Gross Domestic Product of a country.
- It is the total value of imports of a country in a year.
- It is the ratio between the value of exports and that of imports between two countries.
- It is the number of months of imports that could be paid for by a country’s international reserves.
Explanation:
Foreign currency reserves (months of import coverage) The stock of foreign exchange reserves in terms of months of retained imports of goods as at end of year. It measures the number of months of money available in the national bank to cover the cost of imports.
Why the question Came:
India’s import cover improved to 10.9 months at the end of March 2016, from 9.8 months at end-September 2015, as the country’s reserves improved about $10 billion in the period, the Reserve Bank of India (RBI) said in its half yearly report on foreign exchange reserves. The Economic Survey also talked in detail about India’s Forex Reserves and the Import cover was analyzed. FM too spoke about this. In the light of volatile world economic situation, this is important.
Sources:
The Economic Survey 2016-17, RBI Reports
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