New Delhi, July 7: India’s foreign exchange reserves rose sharply by $4.84 billion to $702.78 billion in the week ended June 27, bringing them within striking distance of the all-time-high level of $704.89 billion recorded in end-September 2024, according to the latest data released by the Reserve Bank of India (RBI).
This marks a strong rebound from late January levels, when reserves had fallen to a multi-month low of around $624 billion.
The gain was led by an increase in foreign currency assets, while gold reserves declined. The value of gold reserves fell $1.23 billion to $84.5 billion, while foreign currency assets surged by $5.75 billion to $594.82 billion.
Foreign currency assets, expressed in dollar terms, account for the impact of the appreciation or depreciation of other currencies such as the euro, pound, and yen held in the reserves.
Special drawing rights (SDRs) rose by $158 million to $18.83 billion during the week ended June 27. India’s reserve position with the IMF also saw an uptick of $176 million to $4.62 billion, according to the RBI data released on July 4.
Despite the headline rise in reserves, the RBI’s forward dollar book — which represents future dollar obligations — fell by $19 billion in April and May, shrinking to $65.2 billion in May from a record $88.7 billion in February. However, the RBI’s net dollar sales during the same period were relatively modest at $3.2 billion.
The forward book positions matter because they can offset part of the comfort provided by headline reserves, as they reflect future dollar outflows.
The rupee, which has seen increased volatility since April amid global trade tensions, has also been supported by the RBI intervention. The central bank strategically buys dollars when the rupee is strong and sells them when it weakens to smooth out volatility and prevent steep depreciation.
In its last monetary policy statement, RBI Governor Sanjay Malhotra said India’s forex reserves were adequate to cover 11 months of imports and 96% of the country’s external debt, underlining the strength of India’s external position.