According to RBI data, India’s forex reserves jumped by $15.267 billion to reach $653.966 billion—the highest increase in over two years—driven by a $10 billion forex swap. Foreign currency assets, gold, and SDRs bolster reserves, supporting rupee stability, meeting external obligations, and enhancing investor confidence, thereby strengthening economic resilience overall.
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According to data released by the Reserve Bank of India (RBI), Foreign exchange reserves experienced their sharpest increase in over two years, increasing by $15.267 billion to reach $653.966 billion.
Foreign exchange reserves (also known as forex reserves) are assets held by a central bank or monetary authority in foreign currencies, gold, and other assets like Special Drawing Rights (SDRs).
In India, these reserves are maintained by the Reserve Bank of India (RBI).
Component
Foreign Currency Assets (FCAs): Comprising of foreign currencies like the US dollar, Euro, and Pound Sterling, among others. The largest component, FCAs increased by $13.993 billion to $557.282 billion.
Gold Reserves: India holds $74.325 billion of gold as part of its foreign exchange reserves, which serve as a hedge against inflation and provide stability during economic uncertainties.
Special Drawing Rights (SDRs): International reserve assets created by the IMF to supplement member countries' official reserves. India's SDR holdings increased to $18.21 billion.
Reserve Position in the IMF: India's share in the IMF's quota, which can be used to draw on IMF resources in times of need. This position is valued at $4.148 billion.
Functions of Exchange reserve:
The RBI uses these reserves to intervene in foreign exchange markets and stabilize the value of the Indian Rupee against other currencies.
Reserves allow India to meet its external obligations, such as import payments and international loan repayments.
Strong foreign exchange reserves provide assurance of financial stability to investors, which increases confidence in the economy.
The reserves increased by $15.267 billion to $653.966 billion, the biggest weekly increase since 2021.
The main reason for this rise was a $10 billion forex swap that the RBI influxed in the market in February, 2025.
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PRACTICE QUESTION Q. Analyze the role of the Reserve Bank of India in managing foreign exchange reserves. 150 words |
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