India’s forex reserves inch closer to record high; jumps to $699 billion

New Delhi [India], June 21 (ANI): India’s foreign exchange reserves (forex) extended their gains, jumping USD 2.294 billion to USD 698.950 billion in the week ending June 13, official data released by the Reserve Bank of India showed.

At the latest monetary policy meet, RBI Governor Sanjay Malhotra said the foreign exchange kitty was sufficient to meet 11 months of the country’s imports and about 96 per cent of external debt.

With this weekly jump, the forex kitty is close to its all-time high of USD 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 USD 589.426 billion.

According to RBI data, the gold reserves currently amount to USD 86.316 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 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.