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Daily Current Affairs – 2020

Topic: For Prelims and Mains

India’s rising Forex Reserves

11th Aug 2020

Why in news?

India’s foreign exchange reserves are rising and are slated to hit the $500 billion mark soon. 

In the last month, it jumped by $12.4 billion to an all-time high of $493.48 billion.


  • Due to COVID-19 induced lockdown, all sectors of the economy took a blow which in turn has resulted in crawling GDP forecasts.
  • The economic situation is gloomy and the GDP growth has gone in the contraction mode for the first time in 40 years with almost all manufacturing activity and trade at standstill since the end of March 2020.

Why Forex is Increasing?

  • One major reason behind this rise in forex reserves is the rise in investment in foreign portfolio investors in Indian stocks and foreign direct investments (FDIs) with foreign investors acquiring stakes in several Indian companies in the last two months.
  • The fall in crude oil prices has brought down the oil import bill, saving the precious foreign exchange.
  • Overseas remittances and foreign travels have fallen steeply – down 61 per cent in April from $12.87 billion following the COVID-19 crisis. 
  • Jio Platforms which is a Reliance Industries subsidiary has witnessed a series of foreign investments totalling Rs 97,000 crore, contributing to forex increase.

Significance of this rise: 

  • The rising forex reserves will provide comfort to the government and the RBI in the management of India’s external and internal financial issues at a time when the economic growth is set to contract by 1.5 per cent in 2020-21.
  • It will act as a shock absorber in the event of any economic crisis/shock and will be enough to cover the import bill of the country for a year.
  • Rise in Reserves will provide a level of confidence to markets that a country can meet its external obligations, demonstrate the backing of domestic currency by external assets, assist the government in meeting its US dollar needs and external debt obligations and maintain a reserve for national disasters or emergencies.
  • It has also helped the Indian Rupee to strengthen against the Dollar.

What are Forex Reserves? 

  • These are assets held on reserve by a central bank in foreign currencies, which can include bonds, treasury bills and other government securities.
  • India’s forex reserves include Foreign Currency Assets(FCA), Gold reserves, Special Drawing Rights(SDR), Reserve Tranche Position with the International Monetary Fund (IMF).
  • Approximately 64 per cent of the foreign currency reserves are held in securities like Treasury bills of foreign countries, mainly the US and around 28 per cent is deposited in foreign central banks and 7.4 per cent is deposited in commercial banks abroad. 
  • The forex reserves are managed by the Reserve Bank of India for the Indian government and the main component is foreign currency assets and they act as the first line of defence for India in case of economic crisis.
  • The reserve facilitates external trade and payment and promotes orderly development and maintenance of foreign exchange market in India.

What is Reserve tranche?

  • Reserve tranche is a portion of the required quota of currency each member country must provide to the International Monetary Fund (IMF) that can be utilized for its own purposes.

What is SDR? 

  • The SDR (Special Drawing Rights) is an international reserve asset, created by the IMF in 1969 to supplement its member countries’ official reserves. The SDR is neither a currency nor a claim on the IMF.
  • Initially, SDR was defined as equivalent to 0.888671 grams of fine gold, which at the time, was also equivalent to one U.S. dollar but after the collapse of the Bretton Woods system, the SDR was redefined as a basket of five currencies namely the U.S. dollar, the Euro, the Chinese Renminbi, the Japanese Yen, and the British Pound Sterling.

Butterflies Species of  Matheran:

In News- Recently, Scientists from the Bombay Natural History Society published a research paper on the forgotten butterflies of Matheran in the community peer-reviewed ‘Biodiversity Data Journal’.

  • Scientists found 140 rare species of butterflies, including 77 new ones in Matheran after a long gap of 125 years.
  • The last time butterflies have codified in this eco-sensitive zone was in 1894, when a researcher identified 78 species.

Key Points:

  • The maximum diversity (125) of butterflies was recorded during winter, while the least (80) during monsoon.
  • Bio statistical techniques were used by the team. The team used a barcode system to denote seasons and the activities of the butterflies.
  • This system will help biologists studying butterflies present such data concisely and effectively.


  • A long-term study of butterflies will surely help the scientific community to understand and conserve the health of the ecosystem.

 About Matheran:

  • Matheran means “forest on the forehead” (of the mountains) is an eco-sensitive region, declared by the Ministry of Environment, Forest and Climate Change.
  • It is one of the smallest hill stations of India and is part of the Mumbai Metropolitan Region along the Western Ghats.

What is the Eco-Sensitive Region?

  • It is the area which has been notified by the Ministry of Environment, Forests and Climate Change (MoEFCC), as areas around the Wildlife Sanctuaries, National Parks and Protected Areas as requiring more protection due to their fragility.


  • To manage and regulate the activities around these areas with the intention of creating some kinds of ‘shock absorbers’
  • To provide a transition zone between the highly protected and relatively less protected areas.
  • To give effect to Section 3(2)(v) of the Environment Protection Act, 1986 which restricts the operation of industries or processes to be carried out in certain areas or to maintain certain safeguards to operate industries.

Facts for Prelims

Kisan Rail:

Indian Railways will introduce “Kisan Rail”, a special Parcel Train from Devlali (Maharashtra) to Danapur (Bihar).

  • It is in pursuance of announcement made by Finance Minister in Union Budget 2020-21.
  • It is expected that the train will provide seamless supply chain of Perishable produce, will be a great help to the farmers.


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