Fifth of India’s forex reserves at risk if US does not up debt ceiling

One-fifth of India’s foreign exchange reserves are at risk if the US is unable to raise the debt ceiling and actually defaults on its debt obligations. According to US Treasury, at the end of July 2013, India held $59.1 billion of US treasury securities. This accounts for 21 per cent of India’s foreign exchange reserves of $276 billion.

The debt ceiling is the total amount of money the US government is authorised to borrow to meet its various legal obligations, including interest payment on the national debt. Many countries, including India, have lent money to the US Government by investing in US Treasury securities. Holding $1.27 trillion of US treasury securities, China is the largest lender to the US. Among other emerging markets, Brazil with $256 billion, and Taiwan with $178 billion, are others with high exposure.

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