A rise  is seen in India`s Forex reserve by USD 394 million to USD 631 billion

Context

?  Recently, the RBI data verify that the country`s foreign
exchange reserve has increased by USD 394 million to USD
631 billion in the week ended, march.
? This gain was observed due to the rise in the foreign
currency asset a major component of the overall reserves.
? Previously it touched a lifetime high of USD 642.453 billion in
the week ended September,2021.

Key points on  Forex  reserve  

?  A reserve that is held by the central bank in foreign
currencies which can include bonds , treasury bills and other
government securities to meet the balance in their domestic
market or to avoid any economic discrepancies for the
country is said to be the forex reserve of the country.
? In  India forex reserved is maintained by the Reserve bank of
India.  The forex reserve of India include;
? Foreign currency assets
? Gold reserves
? Special drawing rights
? Reserve position with the International
Monetary fund(IMF)

Foreign Currency Asset

?   FCAs are the assets are those assets whose value based
on a currency other than the country`s own currency.
? It constitutes the largest component of the forex reserve and
is expressed in terms of the Dollar.
? FCAs affected by the appreciation or depreciation of non-US
units like the euro, yen, and pound held in foreign exchange
reserve.
? Currency appreciation is the increase in value of one
currency relative to another in the forex market whereas
depreciation is a fall in the value of a currency.

? The value of the currency is determined by the market forces
in a floating exchange rate system. 

Special drawing rights

?      An international reserve asset, created by the IMF in 1969
to supplements its member countries s` official reserves is
categorized as Special Drawing Rights that is SDRs.
? Its value is calculated from a weighted basket of major
currencies such as the US dollar, the euro, the Japanese
Yen, the Chinese yuan, and the British pound.SDRs can be
exchanged for these currencies.
? The total SDR holding of India now stands at 13.66 billion as
of August 23, 2021.
Reserve position in the IMF

?  A reserve tranche position is the quota of currency that a
member country has to provide to the IMF that can be
utilized for its own purposes.
? IMF members can access this account at any time without
agreeing to conditions or paying a service fee.