forex-reserves-climb-for-sixth-week-to-677-84-billion

India's foreign exchange reserves climbed by USD 1.567 billion to reach USD 677.835 billion for the week ending 4 April, marking the sixth consecutive week of increase, according to data released by the Reserve Bank of India (RBI).

 

The rise was largely driven by a gain in foreign currency assets, which went up by USD 892 million to USD 574.98 billion.

 

Foreign currency assets make up the largest share of India's forex reserves.

 

The data further revealed a surge in gold reserves, which rose by USD 638 million to stand at USD 79.997 billion for the same period.

 

However, the Special Drawing Rights (SDRs) component registered a minor decline, falling by USD 6 million to USD 18.356 billion.

 

According to RBI estimates, India’s current forex reserves are sufficient to cover 10–11 months of projected imports.

 

India's forex market has shown robust growth in recent years, with average daily turnover nearly doubling from USD 32 billion in 2020 to USD 60 billion in 2024.

 

The country had added nearly USD 58 billion to its forex reserves in 2023, in contrast to a cumulative decline of USD 71 billion the previous year. In 2024 so far, reserves have increased by a little over USD 20 billion.

 

Foreign exchange reserves are the external assets held by a country’s central bank or monetary authority. These typically include reserve currencies such as the US Dollar, and to a lesser extent, the Euro, Japanese Yen, and Pound Sterling.

The RBI frequently intervenes in the currency market to manage volatility and ensure the stability of the Rupee. It buys dollars when the Rupee is strong and sells them to curb excessive depreciation when the domestic currency weakens.

On the other hand, Foreign Currency Assets (FCAs) are a major component of a country’s foreign exchange reserves, consisting of assets such as foreign government bonds, securities, deposits with foreign central banks, and other instruments held in currencies like the US Dollar, Euro, Pound Sterling, and Japanese Yen.

These assets are managed by the central bank—in India’s case, the Reserve Bank of India (RBI)—to ensure financial stability, facilitate international trade, and maintain investor confidence.