India’s foreign exchange reserves posted a notable recovery of USD 2.703 billion, bringing the total to USD 698.192 billion for the week ending 25 July, according to data released by the Reserve Bank of India (RBI). The uptick follows a three-week streak of decline that saw reserves slip by over USD 6 billion cumulatively.
The increase was largely driven by gains in foreign currency assets (FCAs) and gold holdings, both key components of the country’s forex basket. FCAs rose by USD 1.316 billion to reach USD 588.926 billion, while gold reserves saw an increment of USD 1.206 billion, lifting the total to USD 85.704 billion.
India’s Special Drawing Rights (SDRs) with the International Monetary Fund (IMF) also saw a moderate rise of USD 126 million, taking the figure to USD 18.809 billion.
The central bank continues to manage its reserves actively, balancing liquidity requirements and exchange rate stability. The RBI has been known to strategically buy US dollars when the Rupee strengthens and sell during bouts of weakness, in a bid to cushion volatility.
Also read: Forex reserves dip by USD 1.183 bn
Governor Sanjay Malhotra, while announcing the outcome of the Monetary Policy Committee (MPC) meeting, noted that, “India's foreign exchange reserves are sufficient to meet 11 months of the country's imports and about 96 per cent of external debt.”
Notably, gold has emerged as a growing pillar of India’s reserve strategy. The share of gold in the RBI’s forex reserves has nearly doubled since 2021, aligning with a global trend wherein central banks are increasingly diversifying into safe-haven assets.
The resilience in reserves in 2023 and 2024 has helped offset the sharp depletion seen in 2022. Last year, the reserves surged by USD 58 billion, in stark contrast to a fall of USD 71 billion in 2022. In 2024 so far, the country has added over USD 20 billion, with a record high of USD 704.885 billion touched at the end of September.
Foreign exchange reserves, or FX reserves, are assets held by a central bank in foreign currencies, primarily the US Dollar, followed by the Euro, Japanese Yen, and Pound Sterling. These reserves serve as a buffer against external shocks, aid in managing the currency, and support macroeconomic stability.
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