India’s foreign exchange reserves rose by $4.553 billion to reach $690.617 billion for the week ending May 9, according to the latest data released by the Reserve Bank of India (RBI). This marks a significant rebound following a brief dip in the previous week, after eight consecutive weeks of gains. The country’s forex reserves had previously touched an all-time high of $704.89 billion in September 2024.
The increase in the latest week was largely driven by a sharp rise in gold reserves, which surged by $4.518 billion to $86.337 billion. India’s foreign currency assets (FCA) – the largest component of its forex reserves – stood at $581.373 billion.
Globally, central banks have been steadily increasing their gold holdings as part of their foreign exchange strategies, and India is following suit. The share of gold in the RBI’s forex reserves has nearly doubled since 2021, reflecting a growing preference for this safe-haven asset.
India’s foreign exchange reserves are currently sufficient to cover about 10 to 12 months of projected imports, providing a strong buffer against external shocks.
In 2023, India added approximately $58 billion to its forex reserves, in contrast to a cumulative decline of $71 billion in 2022. So far in 2024, reserves have increased by just over $20 billion.
Foreign exchange reserves, or FX reserves, are assets held by a country’s central bank—primarily in major global currencies such as the U.S. Dollar, Euro, Japanese Yen, and British Pound. The RBI actively manages these reserves, often intervening in currency markets to maintain stability. It typically buys dollars when the Rupee is strong and sells them during periods of depreciation to manage exchange rate volatility and ensure adequate liquidity.
