International investment position improves in Q3: RBI

Mumbai: The country’s international investment position (IIP) or the difference between external financial assets and liabilities, declined by USD 3.8 billion to USD 364.7 billion in the December quarter.

The improvement is due to a fall in net claims of non-residents, as reflected in net IIP, to the tune of USD 3.8 billion at USD 364.7 billion during the reporting quarter from USD 368.5 billion in the previous quarter, the Reserve Bank said today.

This was on the back of a decline of USD 27.7 billion in foreign-owned assets in the country vis-?-vis a reduction of USD 24 billion in the residents’ overseas financial assets during the period.

During the period, the residents’ overseas financial assets also declined by USD 24 billion mainly due to a fall of USD 13.1 billion in the reserve assets and USD 11.9 billion in currency and deposits, the central bank data showed, while direct investment grew USD 3.4 billion during the quarter.

Foreign-owned assets in the country decreased by USD 27.7 billion over the previous quarter mainly due to a decline in currency and deposits as well as in portfolio investments in the country.

The RBI said as the exchange rate variations affected the changes in liabilities, when valued in US dollar terms, as the rupee depreciated during the quarter by 1.9 per cent.

Reflecting the improved IIP position is also seen in a better ratio of the country’s international financial assets to international financial liabilities, which came down to 59.8 per cent in the December quarter from 60.5 per cent in the previous three-months period.

Reserve assets continued to have a dominant 66.3 per cent share in the nation’s international financial assets during the reporting period, followed by direct investments in overseas marketers at 26.6 per cent, the RBI said.

The country’s international financial liabilities are led by direct investment (35.2 per cent), followed by portfolio investment (24.4 per cent), loans (17.7 per cent), and currency and deposits (12.1 per cent), it said.