India's forex kitty surges to 5-month high at $665.4 billion

IANS April 4, 2025 308 views

India's foreign exchange reserves have impressively climbed to $665.4 billion, marking a significant economic milestone. The Reserve Bank of India reported a $6.6 billion increase, reversing previous declining trends. This surge reflects strong economic fundamentals and provides greater stability for the rupee in volatile global markets. The positive trend is further supported by a narrowing trade deficit and steady export performance.

"A strong forex kitty enables the central bank to intervene in currency markets" - RBI Statistical Report
Mumbai, April 4: India's foreign exchange reserves surged by $6.6 billion to a five-month high of $665.4 billion for the week ended on March 28, 2025, data released by the Reserve Bank of Indian on Friday showed.

Key Points

1

Forex reserves rise for fourth consecutive week

2

Gold reserves increase by $519 million

3

Merchandise trade deficit narrows to 3-year low

4

Exports remain steady despite global tensions

According to the RBI's Weekly Statistical Supplement, the country's gold reserves which also form part of the forex kitty went up by $519 million to $77.8 billion.

This is the fourth consecutive week of rise in the forex reserves kitty after the increase of $4.5 billion to $658.8 billion in the preceding week that ended on March 21. The declining trend of earlier weeks due to revaluation and forex market interventions by the RBI to help reduce volatility in the rupee has now been reversed in the last four weeks.

Earlier, the country's forex reserves had increased to an all-time high of $704.885 billion in September 2024.

Any strengthening of the country's foreign exchange kitty also helps bolster the rupee vis-a-vis the US dollar, which is good for the economy. With the recent increase in foreign exchange reserves, the rupee has also emerged stronger.

An increase in the foreign exchange reserves reflects strong fundamentals of the economy and gives the RBI more headroom to stabilise the rupee when it turns volatile.

A strong forex kitty enables the central bank to intervene in the spot and forward currency markets by releasing more dollars to prevent the rupee from going into a free fall.

Conversely, a declining forex kitty leaves the RBI less space to intervene in the market to prop up the rupee.

Meanwhile, India's merchandise trade deficit has narrowed to an over 3-year low at $14.05 billion in February from $22.99 billion in January as exports held steady during the month while imports declined, according to the latest data compiled by the Ministry of Commerce and Industry. This reflects a strengthening of the external sector of the economy despite geopolitical tensions triggering economic uncertainty in the world market.

The country's merchandise exports increased by 1.3 per cent to $36.91 billion in February, as compared to $36.43 billion in January, while imports fell by 16.3 per cent to $50.96 billion compared with $59.42 billion in the previous month.

Reader Comments

R
Rahul K.
This is fantastic news for our economy! The steady growth in forex reserves over the past month shows our fundamentals are strong despite global uncertainties. 💪
P
Priya M.
While the numbers look good, I wonder how much of this is due to RBI interventions vs actual economic growth. The article mentions both factors but doesn't quantify their impact.
A
Amit S.
The narrowing trade deficit is the real highlight here! Exports up and imports down - that's the sustainable path forward for our economy. Great to see positive indicators across the board.
S
Sunita R.
Gold reserves increasing too! 🥇 Always good to have that safety net. Hope this momentum continues through the financial year.
V
Vikram J.
The article could have explained more about what caused the imports to decline so sharply (16.3% is huge). Is it reduced oil prices? Lower demand? Would help understand the complete picture.
N
Neha P.
As someone who works in exports, this makes me so happy! The stronger rupee might pinch a bit, but the overall economic stability is worth it. Here's to more good news! 🎊

We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.

Tags:
India Forex Reserves RBI Economic Fundamentals Currency Markets Rupee Stability
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