Sunday, April 5, 2015

External debt of India rose US$ 6 billion QoQ, to US$ 462 billion by end of Dec'2014.

India's external debt rose to USD 462 billion at the end of Dec'2014, up from USD 456 billion at the end of Sep'2014. This is 8% higher than USD 427 billion, a year ago. The increase was driven by Commercial borrowings, which now constitute 37% of total external debt (up from 20% in Sep'04).
Forex reserve at the end of Dec'2014 was USD 322 billion (This has risen to USD 340 bn recently).
Forex reserves currently at US$ 340 billion; Looks adequate.  Forex reserve as a percentage of total external debt increased to 70%. As a percentage of non-Rupee debt, forex reserves rose to 95% from 91% in Sep'2014, a key positive for the Rupee (NYSEARCA:INR) as it lowers the pressure on the forex reserves.

Source: Ministry of Finance

Commercial borrowings constituted 37% of total external debt, followed by Deposits from non-resident Indians' deposits ((24%)) and Short term debt ((19%)):

Source: Ministry of Finance

Decrease in share of non-INR debt is a positive.
Forex reserves might see pressure if maturing forex debt does not get refinanced by fresh forex borrowings.
Rupee to trade at 61-63 in the near-term; Year-end target at INR 65/USD.

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