Import ratio

Import ratio, in economics and government finance, is the ratio of total imports of a country to that country’s total foreign exchange (FX) reserves.[1] The ratio can be inverted and is referred to as the reserves to imports ratio. This ratio divides a country's average foreign exchange reserve by a country's average monthly level of imports.[2]

## Relation to sovereign risk

Credit restructuring is made more likely by a higher amount of imports relative to FX reserves. A less developed country will pay for imports with its foreign exchange reserves. The more it imports, the faster these reserves are used up. Since satisfying a country's needs is considered more important than repaying foreign creditors the more a country imports relative to its foreign exchange reserves the greater the probability of debt rescheduling.[3]

## References

1. ↑ Cornett, Marcia Millon; Saunders, Anthony (2006). Financial Institutions Management: A Risk Management Approach, 5th Edition. McGraw Hill. ISBN 978-0-07-304667-9.
2. ↑ http://www.adelaide.edu.au/cies/papers/0302.pdf Exchange Rate Policy and Foreign Exchange Reserves Management in Indonesia in the Context of East Asian Monetary Regionalism
3. ↑ "Sovereign Risk" (in en). https://www.investopedia.com/terms/s/sovereignrisk.asp.

0.00

(0 votes)

Original source: https://en.wikipedia.org/wiki/Import ratio. Read more

|

Retrieved from "https://handwiki.org/wiki/index.php?title=Finance:Import_ratio&oldid=586305"