The report said that the surplus transfer ratio was a measure of seigniorage a term used to describe profits the government makes by printing currency. In other words, the difference between the face value of currency notes and its production cost. The report quotes research to poi9nt out that seigniorage between 0.5% and 1% of GDP allows the central bank to conduct monetary policy with a fair degree of independence. The report also says that the surge in the number of foreign exchange reserves can be deceptive, and a better gauge of external sector vulnerability is an assessment of indicators like the export cover. In terms of projected imports for 2021-22, the current level of reserves provides cover for less than 15 months, which is lower than for other major reserve holders Switzerland, Japan and China. Another reasons why India's forex reserve position is deceptive is that it co-exists with a net international investment position of -12.9% of GDP. This means that India is a net recipient of foreign investment and should this money be withdrawn by investors, the reserves can deplete fast. In early June, the level of foreign exchange reserves crossed 600 billion. With this development, India is the fifth-largest reserve-holding country in the world. China has stepped up its campaign to rein in comspeculation in a bid to ease the threat to its pandemic rebound from soaring raw material costs. State-owned enterprises were ordered to control risks and limit their exposure to overseas commodities markets by the state owned Assests Supervision and Administration Commission according to people with knowledge of the matter. In a second development, the National Food and Strategic Reserves Administration will soon release state stockpiles of metals including copper, aluminum and zinc the agency said on Wednesday.
