India’s foreign exchange reserves witnessed their sharpest weekly increase in nearly five months, rising by USD 6.6 billion to touch USD 665.396 billion for the week ending 28 March, data released by the Reserve Bank of India (RBI) on Saturday revealed.
The rise marks the fourth consecutive week of gains, with cumulative additions totalling USD 20.1 billion over the past month. The RBI noted that this robust increase follows a period of volatility and decline, primarily attributed to wavering confidence among foreign investors in Indian equity markets.
According to the RBI’s weekly statistical supplement, foreign currency assets stood at USD 565.014 billion, while the country’s gold reserves were valued at USD 77.793 billion as of 28 March.
The Indian Rupee also appreciated by 0.6 per cent against the US dollar during the same period, a movement attributed by analysts to a renewed wave of foreign investment in domestic stock markets.
"Any decline in reserves is most likely due to RBI intervention, aimed at preventing a sharp depreciation of the Rupee," the RBI stated in its report.
Experts suggest that the central bank’s market interventions — typically selling dollars during periods of depreciation and buying during periods of appreciation — have played a crucial role in maintaining currency stability.
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Foreign exchange reserves, comprising foreign currency assets, gold reserves, Special Drawing Rights (SDRs), and the reserve position in the International Monetary Fund (IMF), are crucial for managing external shocks and stabilising the domestic currency.
According to official estimates, the current reserve position is sufficient to cover approximately 10 to 11 months of projected imports.
In 2023, India added nearly USD 58 billion to its forex reserves, following a sharp cumulative decline of USD 71 billion in 2022. In the current calendar year, reserves have already risen by over USD 20 billion.
The reserves, primarily held in major global currencies such as the US Dollar, Euro, Japanese Yen, and Pound Sterling, are managed by the RBI as part of its monetary and exchange rate policy.
RBI’s calibrated liquidity management, including active interventions in the forex market, continues to play a key role in maintaining the stability of the Rupee and ensuring adequate buffer levels amid global uncertainties.
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