In 2023, India added approximately USD 58 billion to its forex reserves, recovering from a USD 71 billion decline in 2022. In 2024, the reserves have risen by over USD 20 billion so far.
India’s foreign exchange reserves continued their upward momentum, rising by USD 1.567 billion to USD 677.835 billion in the week ending April 4, according to data released by the Reserve Bank of India (RBI). This marks the sixth consecutive week of gains in the country’s forex holdings. The increase reflects strong foreign currency asset growth and a significant rise in gold reserves. According to the RBI, the foreign currency assets, which form the largest portion of the reserves, rose by USD 892 million to USD 574.98 billion. Meanwhile, gold reserves surged by USD 638 million, reaching USD 79.997 billion.
Breakdown Of Reserve Components
The foreign currency assets (FCA) continued their upward march, solidifying their role as the main engine behind India’s growing forex reserves. These assets mainly consist of securities and deposits in global heavyweights like the US Dollar. On the flip side, Special Drawing Rights (SDRs) took a small step back, dropping by USD 6 million to settle at USD 18.356 billion. While the FCA shines bright, SDRs are just taking a breather, showing that even in the world of forex, it’s not always smooth sailing for every player in the game!
Import Cover And Forex Market Trends
According to RBI estimates, India’s current forex reserves are sufficient to cover approximately 10 to 11 months of projected imports. This import cover signals a healthy buffer against global uncertainties and external shocks.
India’s forex market has also experienced strong growth in recent years. The average daily turnover nearly doubled from USD 32 billion in 2020 to USD 60 billion in 2024, highlighting rising global engagement and increased market participation.
Annual Trends And RBI’s Intervention Strategy
In 2023, India added approximately USD 58 billion to its forex reserves, recovering from a USD 71 billion decline in 2022. In 2024, the reserves have risen by over USD 20 billion so far. The RBI manages forex reserves actively, buying dollars when the rupee strengthens and selling when it weakens. This strategy helps the central bank manage liquidity and stabilize the domestic currency.
(With Inputs From ANI)
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