India’s foreign exchange reserves (forex) dipped by USD 4.888 billion to USD 685.729 billion in the week ending May 16, according to official data released by the Reserve Bank of India (RBI). Estimates suggest that India’s foreign exchange reserves are sufficient to cover approximately 10–12 months of projected imports.

Despite this weekly decline, the forex kitty remains close to its all-time high of USD 704.89 billion, recorded in September 2024. Recently, forex reserves had extended gains for eight consecutive weeks, inching closer to their previous peak after a consistent slump lasting about four months.

The latest RBI data shows that India’s foreign currency assets (FCA), the largest component of the foreign exchange reserves, stood at USD 581.652 billion. Gold reserves currently amount to USD 81.217 billion, according to RBI data. They fell by a significant USD 5.121 billion during the latest week.

Central banks worldwide are increasingly accumulating safe-haven gold in their foreign exchange reserves, and India is no exception. The share of gold maintained by the Reserve Bank of India (RBI) in its foreign exchange reserves has nearly doubled since 2021.

In 2023, India added around USD 58 billion to its foreign exchange reserves, contrasting with a cumulative decline of USD 71 billion in 2022. In 2024, the reserves have risen by a little over USD 20 billion so far.

Foreign exchange reserves, or FX reserves, are assets held by a nation’s central bank or monetary authority, primarily in reserve currencies such as the US Dollar, with smaller portions in the Euro, Japanese Yen, and Pound Sterling. The RBI often intervenes by managing liquidity, including selling dollars, to prevent steep depreciation of the Rupee. It strategically buys dollars when the Rupee is strong and sells when it weakens.