India’s Forex Reserves See Major Increase

Reserves Almost Reach All-Time High

India’s foreign exchange reserves went up by $5.17 billion. The total is now $696.65 billion for the week ending June 6. The Reserve Bank of India (RBI) shared this news on Friday.

This increase makes up for last week’s drop of $1.237 billion. The reserves are now close to the record high of $704.885 billion. This record was set in late September 2024.

What’s Behind the Increase?

The rise in reserves is due to gains in several key areas. Here’s a breakdown:

• Foreign Currency Assets (FCAs): FCAs, the biggest part of the reserves, went up by $3.47 billion to $587.68 billion. FCAs are affected by major global currencies like the euro, pound, and yen.
• Gold Reserves: Gold reserves saw a big jump of $1.58 billion, reaching $85.88 billion. This is due to higher global gold prices and possibly more gold held by the central bank.
• Special Drawing Rights (SDRs): India’s SDRs with the International Monetary Fund (IMF) increased by $102 million to $18.67 billion.
• Reserve Position with IMF: The country’s reserve position with the IMF went up by $14 million to $4.4 billion.

Why Forex Reserves Matter

This recent increase in reserves happens during a shaky global situation. There are geopolitical risks and rising commodity prices. The rupee is also under pressure due to tensions in the Middle East.

The RBI’s strong reserve position should help steady the currency. It will also help handle any external shocks. India’s forex reserves act as a crucial shield against global financial storms. They show the country’s economic strength. This helps keep the exchange rate stable and investors confident.