India’s Forex Reserves Rise by USD 2.7 Billion to USD 698.2 Billion After 3-Week Drop

India’s foreign exchange reserves saw an increase of USD 2.703 billion, reaching USD 698.192 billion in the week ending July 25, according to the latest data from the Reserve Bank of India (RBI). This rise came after three straight weeks of decline. Last week, the reserves had dropped by $1.18 billion, falling to $695.49 billion. The new increase has brought some relief, reversing the recent downward trend.

Foreign Currency and Gold Drive Growth

A key part of the reserves—foreign currency assets—went up by USD 1.316 billion, reaching USD 588.926 billion. This likely played a big role in the overall rise in forex reserves for the week.

Gold holdings also contributed, rising by USD 1.206 billion to a total of USD 85.704 billion. This continues the trend of central banks, including the RBI, holding more gold as a safe asset in uncertain times. India’s Special Drawing Rights (SDRs) with the International Monetary Fund (IMF) also saw a boost, going up by USD 126 million and reaching USD 18.809 billion.

India’s Gold Share in Reserves Growing

Central banks around the world are adding more gold to their reserves, and India is following the same path. Since 2021, the share of gold in India’s forex reserves has nearly doubled, showing a shift toward safer assets. In 2023, India added about USD 58 billion to its reserves, a big improvement compared to 2022, when it lost USD 71 billion. In 2024 so far, the country has added over USD 20 billion, with reserves hitting a record high of USD 704.885 billion by the end of September that year.

Reserves Strong Enough to Cover Imports and Debt

Finance Secretary Sanjay Malhotra shared that India’s current forex reserves can cover about 11 months of imports and nearly 96 percent of its external debt. This was mentioned while presenting the results of the latest Monetary Policy Committee (MPC) meeting.

Foreign exchange reserves are financial assets kept by a country’s central bank, mainly in major international currencies such as the US dollar, euro, Japanese yen, and British pound. The RBI uses these reserves to manage the value of the Indian rupee by buying or selling dollars depending on the market situation. This helps to keep the currency stable and prevent sharp changes in its value.