Foreign exchange reserves rose $899 million to touch $285.1 billion during the week ended January 15, largely on account of revaluation of
non-dollar assets in reserves.
The latest figures released by the Reserve Bank of India (RBI) on Friday indicate that the total foreign exchange reserves comprising foreign currency assets, gold and special drawing rights (SDR — reserves currency with the International Monetary Fund) rose $853 million reflecting valuation gains in non-dollar assets. The value of SDR and the reserve capital with the IMF rose $36 million and $10 million, respectively, during the week.
Economictimes
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Great news...right?
Now read this headline -
China Now Has Enough Cash Built Up To Buy 20% Of The S&P 500
Chinese foreign exchange reserves jumped 23.3% in 2009, hitting a mind-blowing $2.4 trillion notes 24/7 Wall St..
To put this into perspective, the S&P 500's total adjusted market cap is just $13.5 trillion according to the latest data sheet from Standard & Poor's. That means China's forex reserves could buy 18% of the S&P500.
Furthermore, if they were to keep growing at the current rate (even though they probably won't), within five years they could theoretically buy half of the S&P500. Now that could be some seriously massive fund flow, even if it isn't likely to happen or even possible.
Source:researchreloaded
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