India’s foreign exchange reserves hit a seven-month high of $690.617 billion | Economic News
New Delhi: India’s foreign exchange reserves (forex) rose by $4.553 billion to $690.617 billion in the week ending May 9, according to official data released by the Reserve Bank of India (RBI). The previous all-time high was US$704.89 billion in September 2024. Forex Kitty fell in the following week after eight consecutive weeks of extended growth, but rose again in the week ending May 9. Foreign exchange reserves had fallen by about four months prior to the latest growth.
The latest Reserve Bank of India data shows that India’s foreign exchange assets (FCA) are the largest component of foreign exchange reserves, at $581.373 billion. According to the Reserve Bank of India, current gold reserves are currently at $86.337 billion, with a growth of $45.18 billion in the last week.
Central banks around the world are increasingly accumulating safe gold in their foreign exchange reserves, and India is no exception. Since 2021, the Reserve Bank of India has nearly doubled its share of gold in its foreign exchange reserves.
It is estimated that India’s foreign exchange reserves are sufficient to cover projected imports in about 10-12 months. In 2023, India increased its foreign exchange reserves by about US$58 billion, compared with the cumulative decline of US$71 billion in 2022. In 2024, the growth rate of reserves was slightly higher than US$20 billion.
Foreign exchange reserves or FX reserves are assets held by national central banks or monetary authorities, mainly used in reserve currencies such as the US dollar, the euro, the Japanese yen and the British pound in small quantities. The RBI often prevents the rupee from depreciating by managing liquidity, including selling USD. When the rupee is strong and sells when it weakens, it strategically buys the dollar.
