Below mentioned are four countries having largest Foreign Exchange Reserves in the world in October 2024. Arrange these countries…

Question

Below mentioned are four countries having largest Foreign Exchange Reserves in the world in October 2024. Arrange these countries in decreasing order of their Foreign Exchange Reserves.

i. India

ii. Japan

iii. China

iv. Switzerland

Choose the correct order:

1. A. i, ii, iv, iii
2. B. iv, i, iii, ii
3. C. iii, ii, iv, i (Correct answer)
4. D. iii, iv, ii, i

Correct Answer

Option C — iii, ii, iv, i

Detailed Solution & Explanation

The correct answer is iii, ii, iv, i.

Key Points

• Ranking by foreign exchange reserves as of October 2024, in decreasing order:

• The order is therefore iii → ii → iv → i.
• India crossed the US$ 700 billion mark for the first time in late September 2024, becoming the fourth country ever to do so, before easing back.

Additional Information

• India is the fourth largest holder of foreign exchange reserves in the world, behind China, Japan and Switzerland.
• The four components of India's reserves, as reported weekly by the RBI:
  • Foreign Currency Assets (FCA) — much the largest share, held in the currencies of major economies
  • Gold reserves
  • Special Drawing Rights (SDRs) with the IMF
  • Reserve Tranche Position (RTP) in the IMF
• Why reserves matter: they finance imports, service external debt, allow the RBI to smooth volatility in the rupee, and underpin sovereign creditworthiness. The conventional adequacy benchmark is import cover — the number of months of imports the reserves can pay for.
• The reserves are managed by the RBI under the RBI Act, 1934 and the FEMA, 1999, with safety and liquidity taking priority over return.
• The 1991 crisis is the reference point: reserves fell to roughly two weeks of imports, India pledged gold to the Bank of England and the Bank of Japan, and the episode triggered the LPG reforms of liberalisation, privatisation and globalisation.