India’s foreign exchange reserves saw a rise of USD 4.8 billion in the week ended June 27, after a decline in the previous week. Official data released by the Reserve Bank of India showed that forex reserves jumped sharply to USD 702.78 billion.
In the week ending June 20, foreign exchange inflows stood at USD 697.93 billion, down by US$1.02 billion from the previous week.
Foreign currency assets, a major component of the forex reserves, rose by USD 5.75 billion to USD 594.82 billion in the week ended June 27, according to RBI data.
However, according to weekly data, gold reserves declined by USD 1.23 billion to USD 84.5 billion.
Central banks around the world are piling up safe-haven gold in their foreign exchange reserves, and India is no exception. The share of gold held by the Reserve Bank of India (RBI) in its foreign exchange reserves has almost doubled since 2021.
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.
While announcing the outcome of the Monetary Policy Committee (MPC) decisions, Governor Sanjay Malhotra informed that 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.
Also, the RBI Governor expressed confidence 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.
To prevent a sharp fall in the rupee, the RBI often intervenes by managing liquidity, including selling dollars. The RBI strategically buys dollars when the rupee is strong and sells it when it is weak.
With the inputs of ANI
