India’s Forex Reserves Climb to $702.78 Billion, Close to Record High.
India’s foreign exchange reserves have crossed the $700 billion mark once again, reaching $702.78 billion for the week ending June 27, as per the latest data from the Reserve Bank of India (RBI). This brings the reserves within touching distance of the record high of $704.89 billion, last seen in September 2024.
This jump of $4.84 billion marks a strong rebound from levels seen earlier this year, when reserves had dipped to around $624 billion in late January.
What’s Behind the Rise?
- The biggest contributor was a sharp increase in foreign currency assets (FCAs), which rose by $5.75 billion to $594.82 billion.
- However, gold reserves dropped by $1.23 billion, now valued at $84.5 billion.
- Special Drawing Rights (SDRs) went up by $158 million to $18.83 billion.
- India’s IMF reserve position also increased by $176 million, totaling $4.62 billion.
- Foreign currency assets factor in the changing value of major currencies (like the euro, pound, and yen) held in the reserves.
Forward Dollar Book Shrinks
Despite the headline increase, there was a drop in the RBI’s forward dollar book — representing future dollar commitments — which fell by $19 billion over April and May, down to $65.2 billion from a peak of $88.7 billion in February.
RBI’s net dollar sales during that time were modest, totaling $3.2 billion.
Rupee Stability in Focus
The Indian rupee has faced increased volatility since April, but RBI’s active intervention — buying dollars when the rupee strengthens and selling when it weakens — has helped manage sharp swings.
India’s External Position Looks Strong
- According to RBI Governor Sanjay Malhotra, India’s reserves are:
- Sufficient to cover 11 months of imports
- Enough to meet 96% of external debt
A strong reserve buffer boosts investor confidence and provides a cushion against global financial shocks. Notably, in the previous week ending June 20, reserves had dropped by $1.01 billion to $697.93 billion.
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