India’s foreign exchange reserves (forex) witnessed an uptick of USD 4.8 billion to USD 702.78 billion for the week ending June 27, after a decline in the previous week, official data released by the Reserve Bank of India showed.
In the week ending 20 June, forex stood at USD 697.93 billion, down by USD 1.02 billion from the previous week.In the week ending June 27, the major component of the forex reserves, the foreign currency assets, increased by USD 5.75 billion to USD 594.82 billion, the RBI data shows.
The Gold reserves, however, witnessed a dip of USD 1.23 billion, standing at USD 84.5 billion, the weekly data revealed. Central banks worldwide increasingly accumulating safe-haven gold in their foreign exchange reserves kitty, and India is no exception. The share of gold maintained by the Reserve Bank of India (RBI) in its foreign exchange reserves has almost doubled since 2021, till recently. In 2023, India added around USD 58 billion to its foreign exchange reserves, contrasting with a cumulative decline of USD 71 billion in 2022.
In 2024, the reserves rose by a little over USD 20 billion, touching an all-time high of USD 704.885 billion in end-September 2024.India’s foreign exchange reserves (Forex) are sufficient to meet 11 months of the country’s imports and about 96 per cent of external debt, said Governor Sanjay Malhotra while announcing the outcome of the Monetary Policy Committee (MPC) decisions.
The RBI governor expressed confidence, stating that India’s external sector is resilient and key external sector vulnerability indicators are improving.Foreign exchange reserves, or FX reserves, are assets held by a nation’s central bank or monetary authority, primarily in reserve currencies such as the US Dollar, with smaller portions in the Euro, Japanese Yen, and Pound Sterling.
The RBI often intervenes by managing liquidity, including selling dollars, to prevent steep Rupee depreciation. The RBI strategically buys dollars when the Rupee is strong and sells when it weakens.