- Import cover is calculated as the total value of international reserves divided by the average monthly value of imports. - It indicates how many months a country can continue to pay for imports if its sources of foreign exchange earnings (like exports, remittances, capital inflows) were to cease. - A higher import cover indicates a stronger external position and greater resilience to external shocks. A common benchmark is 3-4 months of import cover, considered adequate by many international financial institutions.
Which of the following best describes the term 'import cover', sometimes seen in the news?
Asked in UPSC IAS 2016 · Topic: Balance of Payments (BoP) (Components of BoP: Financial Account (Official Reserve Account))
Show answer
Answer: D. It is the number of months of imports that could be paid for by a country's international re‐ serves
More External Sector of Economy questions
- "Gold Tranche" (Reserve Tranche) refers to
- Special Drawing Rights is the currency of International Monetary Fund. This is in the form of
- Which of the following are included in the Reserve Bank of India's Foreign Exchange Reserves (FER) ? a. Foreign Currency Assets (FCA) b. Gold c. Special Drawing Rights (SDR) d. Reserve Tranche Position
- All of the following are international reserves except
- Indian Foreign Exchange Reserves comprises of
- What is the correct descending order of share of following components in Indian Foreign Exchange Reserves in March, 2025, starting from largest to smallest ? 1. Gold Reserves 2. Foreign Currency Assets 3. Reserve position with the IMF 4. SDRs
- Which of the following are a part of India's Foreign Exchange Reserves : (i) Foreign Currency Assets (ii) Gold Reserves (iii) Foreign Assets Held by Indian Individuals or Businesses (iv) Reserve Position with the International Monetary Fund (IMF) Select the correct answer given below
- As per the World Gold Council Report, what is the rank of India in terms of its gold reserve?