India’s foreign exchange reserves rebounded strongly after falling last week’s $702.78 billion
India’s foreign exchange reserves rose by $4.8 billion in the week ending June 27 after a decline last week. Official data released by the Reserve Bank of India show that foreign exchange reserves have risen sharply to US$702.78 billion.
Forex inflows were $69.79 billion in the week ending June 20, down $1.02 billion from the previous week.
Foreign currency assets in foreign exchange reserves were a major component of foreign exchange reserves in the week ended June 27, reaching US$5.75 billion to US$594.82 billion, according to the Reserve Bank of India.
However, gold reserves fell by $1.23 billion to $84.5 billion, according to weekly data.
Central banks around the world have piled up gold for sheltering payments in foreign exchange reserves, and India is no exception. Since 2021, the Reserve Bank of India (RBI) has nearly doubled its share of gold in its foreign exchange reserves.
In 2023, India increased its foreign exchange reserves by about $58 billion, compared with a cumulative decline of $71 billion in 2022. In 2024, reserves rose by more than US$20 billion, reaching US$704.885 billion in December 2024.
In announcing the results of the Monetary Policy Committee (MPC) decision, Governor Sanjay Malhotra told India’s foreign exchange reserves (forex) were sufficient to meet the country’s 11-month imports, about 96% of foreign debt.
Furthermore, the RBI governor is resilient to India’s external sectors, while key indicators of external sector vulnerability are improving.
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.
To prevent a sharp drop in the rupee, the Reserve Bank of India often intervenes by managing liquidity, including selling USD. When the rupee is strong, the RBI strategically bought the dollar and sold it when the rupee is weak.
Input with ANI
