India's foreign exchange reserves increased by USD 938 million to USD 682.321 billion during the week ending May 28, according to the data released by the Reserve Bank of India (RBI). This rise comes after a decline of USD 7.511 billion to USD 681.384 billion in the previous reporting week.
Recent Trends in Forex Reserves
Before the onset of the West Asia crisis, the reserves had reached an all-time high of USD 728.494 billion during the week ending February 27 of this year. However, this was followed by several weeks of declines as the rupee came under pressure, prompting the RBI to intervene in the foreign exchange market by selling dollars.
In a public address on May 11, Prime Minister Narendra Modi urged citizens to save money by reducing overseas travel, using less fuel, and avoiding gold purchases for a year.
Components of Reserves
According to central bank data, foreign currency assets, which constitute a significant portion of the reserves, rose by USD 3.116 billion to USD 546.148 billion for the week ending May 29. These assets, expressed in dollars, include the effects of appreciation or depreciation of non-US units such as the euro, pound, and yen held in the reserves.
In contrast, the value of gold reserves decreased by USD 2.186 billion to USD 112.6 billion during the week. The special drawing rights (SDRs) remained unchanged at USD 18.747 billion. Additionally, India's reserve position with the International Monetary Fund (IMF) increased by USD 8 million to USD 4.826 billion at the end of the reporting week.
Historical Context
Earlier, on January 25, India's foreign exchange reserves had risen sharply by USD 14.167 billion in the week ending January 16, reaching USD 701.360 billion. This increase was driven by a jump in both gold reserves and foreign currency assets, as per the RBI's Weekly Statistical Supplement. The country's forex kitty has been hovering near its all-time high of USD 704.89 billion, set in September 2024.
