India’s foreign exchange reserves rose sharply by USD 4.36 billion to USD 693.32 billion for the week ending December 19, according to data released by Reserve Bank of India (RBI) on Friday.  

The increase reflects the central bank’s efforts to manage liquidity and maintain stability in the foreign exchange market.

The RBI said it closely tracks developments in the forex market and steps in whenever required to ensure orderly trading conditions.

These interventions are aimed at reducing excessive volatility in the rupee’s movement and are not linked to any fixed exchange rate target.

The latest jump in reserves was largely driven by the RBI’s USD/INR buy-sell swap auction worth USD 5 billion, conducted on December 16 to inject liquidity into the banking system.

Under this arrangement, banks sold US dollars to the central bank in exchange for rupees and agreed to buy back the same amount of dollars at the end of the swap period.

The transaction was settled on December 18, adding to the overall reserve position.

In the previous week ending December 12, India’s forex reserves had increased by USD 1.689 billion to USD 688.94 billion.

During that week, gold reserves rose by USD 758 million to USD 107.741 billion, while Special Drawing Rights increased marginally to $18.735 billion.

A week earlier, reserves had climbed by nearly USD 1.03 billion to USD 687.26 billion, supported by a rise in gold holdings and SDRs.

The steady rise in foreign exchange reserves comes amid strong capital inflows into the country.

India has seen a notable surge in foreign direct investment commitments during the current financial year.

Total FDI inflows in the first half of FY2025-26 stood at USD 50.36 billion, marking a 16 per cent increase compared to the same period last year and the highest ever for the first half of any financial year.

Official data also show that gross FDI inflows have grown significantly over the years, rising from over USD 34 billion in 2012-13 to more than USD 80 billion in 2024-25.