New Delhi: India’s foreign exchange reserves registered a strong recovery during the week ending May 8, rising by USD 6.295 billion to reach USD 696.988 billion, according to fresh data released by the Reserve Bank of India on Friday.
The sharp increase comes after the reserves had declined by USD 7.794 billion in the previous reporting week amid volatility in global financial markets and pressure on the rupee.
India’s forex reserves had earlier touched a record high of USD 728.494 billion in late February before geopolitical tensions in West Asia triggered fluctuations in crude oil prices and increased pressure on emerging market currencies. The Reserve Bank of India had intervened in the currency market through dollar sales to stabilise the rupee during the period of uncertainty.
According to the latest data, foreign currency assets, which form the largest component of India’s reserves, increased by USD 562 million to USD 552.387 billion. These assets reflect the impact of movements in major international currencies such as the euro, pound and yen against the US dollar.
A major contributor to the latest jump was the increase in gold reserves. The value of India’s gold holdings surged by USD 5.637 billion during the week to reach USD 120.853 billion, significantly boosting the overall reserve position.
The country’s Special Drawing Rights, or SDRs, with the International Monetary Fund also recorded an increase of USD 84 million, taking the total to USD 18.873 billion.
Meanwhile, India’s reserve position with the International Monetary Fund rose marginally by USD 12 million to USD 4.875 billion during the reporting week.
Foreign exchange reserves are considered a crucial indicator of a country’s financial strength, providing a buffer against external shocks and helping maintain stability in the currency market. A healthy reserve position also strengthens investor confidence and supports the country’s ability to manage imports, overseas debt obligations and global economic disruptions.
The latest rise indicates improving stability in India’s external sector despite continuing geopolitical tensions and uncertainty in international energy markets.
