In 2023, India added nearly USD 58 billion to its forex reserves, reversing the trend from 2022, when the reserves saw a cumulative decline of USD 71 billion.
India’s foreign exchange reserves rose by USD 8.310 billion to reach USD 686.145 billion for the week ending April 18, 2025, according to official data released by the Reserve Bank of India (RBI). This marks the seventh consecutive weekly increase in reserves. The reserves had earlier witnessed a slump for nearly four months after touching an all-time high of USD 704.89 billion in September 2024. The previous decline was largely attributed to the RBI’s interventions in the forex market to curb sharp depreciation in the Indian Rupee, which is currently trading near its all-time low against the US dollar.
Foreign Currency Assets Lead the Rise
The RBI data showed that India’s foreign currency assets (FCA), the largest component of forex reserves, stood at USD 578.49 billion. The FCA reflects the movement of currencies like the US Dollar, Euro, Pound Sterling, and Japanese Yen held in reserves. The data also revealed that India’s gold reserves amounted to USD 84.572 billion.
Estimates suggest that India’s current forex reserves are sufficient to cover approximately 10 to 12 months of projected imports. This robust import cover provides stability against external shocks and global financial volatility.
Year-Wise Trends in Forex Reserves
In 2023, India added nearly USD 58 billion to its forex reserves, reversing the trend from 2022, when the reserves saw a cumulative decline of USD 71 billion. In the ongoing year 2024, the reserves have recorded a rise of over USD 20 billion so far.
The RBI frequently intervenes in the foreign exchange market to manage liquidity and stabilize the Rupee. The central bank sells dollars during periods of Rupee weakness and buys dollars when the Rupee strengthens. Such interventions are aimed at ensuring orderly movement in the forex markets and preventing excessive volatility.
What Are Forex Reserves?
Foreign exchange reserves are assets held by a nation’s central bank or monetary authority, primarily in reserve currencies such as the US Dollar. A smaller share is also held in other currencies like the Euro, Japanese Yen, and Pound Sterling. These reserves act as a financial buffer for the country in times of external economic shocks.
(With Inputs From ANI)
