Key Points
Reserves up $4.5B to $658.8B in March
Gold reserves stand at $77.3B
Covers 10-11 months of imports
RBI actively manages Rupee stability
In the week that ended on March 7, the foreign exchange kitty witnessed the highest weekly gains in over three years.
Before that, forex reserves had slumped for about four months, recently hitting an 11-month low. Then followed the latest rollercoaster movement, with gains some weeks and declines the next.
Forex reserves started falling after touching an all-time high of USD 704.89 billion in September. They are now about 6.5 percent lower from their peak.
The decline in reserves was most likely due to RBI intervention, aimed at preventing a sharp depreciation of the Rupee. The Indian Rupee is now at or near its all-time low against the US dollar.
The latest RBI data showed that India's foreign currency assets (FCA), the largest component of forex reserves, stood at USD 558.856 billion.
Gold reserves currently amount to USD 77.275 billion, according to RBI data.
Estimates suggest that India's foreign exchange reserves are sufficient to cover approximately 10-11 months of projected imports.
In 2023, India added around USD 58 billion to its foreign exchange reserves, contrasting with a cumulative decline of USD 71 billion in 2022. In 2024, the reserves rose by a little over USD 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.
Comments:
Rahul P.
Great to see our reserves growing again! 🇮🇳 The RBI is doing a solid job managing the Rupee's stability during these turbulent global times.
Priya M.
While the growth is positive, I'm concerned about the 6.5% drop from peak. We need stronger policies to protect against future shocks.
Amit K.
That $77B in gold reserves is impressive! Shows we're not putting all our eggs in the dollar basket. Smart diversification by RBI.
Neha S.
Three weeks of gains is promising, but remember last year's $71B drop? We need consistent growth, not just temporary rebounds.
Vikram J.
10-11 months import cover is comfortable but not exceptional. China has over 16 months. We should aim higher for true economic security.
