India’s foreign exchange reserves saw a significant rise, increasing by $7.6 billion to reach $638.2 billion as of February 7, 2025, according to data released by the Reserve Bank of India (RBI) on Friday.
This marks the third consecutive increase in reserves, reflecting improved economic stability and positive market sentiment.
Gold reserves witnessed a notable surge, climbing by $1.3 billion to stand at $72.2 billion. Foreign currency assets, a major component of the forex reserves, also saw a sharp rise of $6.4 billion, settling at $544.11 billion.
However, Special Drawing Rights (SDRs) declined by $11 million, bringing the total to $17.87 billion, while the Reserve Bank’s position with the International Monetary Fund (IMF) dropped by $71 million to $4 billion.
The steady rise in forex reserves comes after a period of fluctuation. Previously, the reserves had reached an all-time high of $704.89 billion in September 2024 before experiencing a downward trend.
The decline was attributed to the revaluation of assets and the RBI’s interventions in the forex market to stabilise the rupee amid global uncertainties.
The central bank has been actively managing liquidity in the market through strategic interventions. By selling dollars at key moments, the RBI has helped curb excessive volatility in the exchange rate.
While the rupee has faced pressure in recent months, the latest increase in reserves suggests that market confidence is gradually being restored.
In a significant policy shift, the RBI recently reduced the repo rate by 25 basis points, bringing it down to 6.25 per cent. This was the first rate cut in five years, signalling a more accommodative monetary policy approach aimed at supporting economic growth.
India’s forex reserves play a crucial role in maintaining financial stability and supporting international trade. The reserves act as a cushion against external economic shocks and provide the RBI with the necessary tools to manage exchange rate fluctuations effectively.
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