India’s forex reserves just shy of record high after $5.2 billion jump last week

NEW DELHI: India’s foreign exchange reserves (forex) jumped $5.171 billion to $696.656 billion in the week ending June 6, official data released by the Reserve Bank of India showed on Friday.

After the latest policy meet, RBI Governor Sanjay Malhotra said the foreign exchange kitty is sufficient to meet 11 months of the country’s imports and about 96 per cent of external debt. With the weekly jump, the forex kitty is close to its all-time high of $704.89 billion in September 2024.

The latest RBI data showed that India’s foreign currency assets (FCA), the largest component of foreign exchange reserves, stood at $587.687 billion. According to RBI data, the gold reserves currently amount to $85.888 billion.

Central banks worldwide increasingly accumulating safe haven gold in their foreign exchange reserves kitty, and India is no exception. The share of gold maintained by the Reserve Bank of India (RBI) in its foreign exchange reserves has almost doubled since 2021, till recently.

In 2023, India added around $58 billion to its foreign exchange reserves, contrasting with a cumulative decline of $71 billion in 2022. In 2024, the reserves rose by a little over $20 billion.

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.

The RBI often intervenes by managing liquidity, including selling dollars, to prevent steep Rupee depreciation. The RBI strategically buys dollars when the Rupee is strong and sells when it weakens. (ANI)