India’s foreign exchange reserves recorded a modest decline of USD 1.02 billion for the week ending June 21, settling at USD 697.93 billion, according to the latest figures released by the Reserve Bank of India (RBI).
The slip follows a robust increase of USD 2.294 billion in the preceding week, which had pushed the total reserves to a historic high of USD 698.95 billion.
The fall during the latest reporting week was primarily driven by a decline in foreign currency assets, which dipped by USD 360 million to USD 589.07 billion. Gold reserves too saw a marginal reduction of USD 5.73 million, standing at USD 85.74 billion.
The value of special drawing rights (SDRs) also declined by USD 85 million to USD 18.67 billion.
External indicators remain strong: RBI
Despite the week’s dip, the central bank maintained that the country’s external sector remains resilient. “India's foreign exchange reserves are sufficient to meet 11 months of the country's imports and about 96 per cent of its external debt,” Finance Secretary Sanjay Malhotra said during the announcement of the latest Monetary Policy Committee (MPC) decisions.
He added that key external vulnerability indicators are improving steadily, a sign of confidence in India’s macroeconomic fundamentals.
Also read: Forex reserves drop to USD 691.49 bn
The RBI has continued its policy of active forex management, buying dollars during periods of rupee strength and selling during weakness to curb excessive volatility.
Rising gold share in reserves
India’s central bank has notably increased its share of gold in its overall forex reserve composition in recent years. Since 2021, the gold share has nearly doubled. In 2023, the RBI added USD 58 billion to reserves, recovering from a USD 71 billion cumulative fall in 2022. In 2024 so far, the reserves have grown by over USD 20 billion.
This trend is in line with global central banks’ approach, many of which have been accumulating gold as a safe-haven asset amid geopolitical uncertainty and currency market volatility.
Foreign exchange reserves, held in reserve currencies such as the US dollar, euro, yen, and pound sterling, are vital for safeguarding against external shocks and maintaining confidence in a country's economy.
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