New Delhi: India’s foreign exchange reserves (forex) rose by USD 5.171 billion to USD 696.656 billion in the week ending June 6, according to official data released by the Reserve Bank of India (RBI) on Friday. Following the latest policy meeting, RBI Governor Sanjay Malhotra stated that the foreign exchange reserves are sufficient to cover 11 months of the country’s imports and about 96 percent of its external debt. With the latest increase, the forex kitty is now close to its all-time high of USD 704.89 billion recorded in September 2024.
The latest RBI data shows that India’s foreign currency assets (FCA)—the largest component of forex reserves—stood at USD 587.687 billion. Gold reserves currently amount to USD 85.888 billion.Central banks around the world are increasingly accumulating safe-haven gold in their foreign exchange reserves, and India is no exception. The share of gold held by the RBI in its forex reserves has nearly doubled since 2021.
In 2023, India added around USD 58 billion to its forex reserves, in contrast to a cumulative decline of USD 71 billion in 2022. In 2024 so far, reserves have increased by just over USD 20 billion.Foreign exchange reserves, or FX reserves, are assets held by a nation’s central bank or monetary authority, mainly in reserve currencies such as the US Dollar, with smaller portions in the Euro, Japanese Yen, and Pound Sterling.
The RBI frequently intervenes in the market to manage liquidity, including selling dollars to prevent sharp depreciation of the Rupee. It strategically buys dollars when the Rupee is strong and sells them when the Rupee weakens.
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