
Key Facts:
Foreign reserves, also known as forex reserves, are assets held by a country’s central bank or monetary authority in foreign currencies, gold, and other assets.
India’s foreign exchange reserves rose by $5.574 billion, reaching $629.557 billion for the week ending January 24, 2025.
Prime Highlights:
Special Drawing Rights (SDRs) increased by $79 million to $17.861 billion, while India’s MF reserve position rose by $33 million to $4.154 billion.
Gold reserves grew by $704 million, reaching $69.651 billion.
Key Background:
India’s foreign exchange reserves rose by $5.574 billion, reaching a total of $629.557 billion for the week ending January 24, 2025, according to data released by the Reserve Bank of India (RBI) on January 31. This increase marks a reversal from the previous week, where the country’s reserves had declined by $1.888 billion to $623.983 billion.
The rise in reserves is attributed to a significant increase in foreign currency assets, which rose by $4.758 billion, bringing their total to $537.891 billion for the week. Foreign currency assets, which are the largest component of India’s reserves, reflect changes in the value of assets held in foreign currencies.
In addition to the growth in foreign currency assets, India’s gold reserves also saw a positive shift. For the week ending January 24, gold reserves increased by $704 million, reaching a total of $69.651 billion. This marks a continuation of India’s strategy to diversify its reserves portfolio and hedge against currency fluctuations.
Special Drawing Rights (SDRs) also saw a modest increase of $79 million, bringing the total value of SDRs to $17.861 billion. SDRs are international reserve assets created by the International Monetary Fund (IMF) to supplement member countries’ official reserves. India’s position with the IMF also improved, with the reserve position increasing by $33 million to $4.154 billion during the same period.
This rise in foreign exchange reserves reflects India’s robust external position and the strengthening of its financial stability. The continued buildup of reserves provides India with a buffer against external shocks, helping to support the stability of its currency and economy.
The increase in reserves follows a period of fluctuations, with some volatility in the global financial environment affecting exchange rates and international trade. However, India’s ability to maintain a strong reserve position highlights the resilience of its economic fundamentals and the ongoing efforts to ensure adequate foreign exchange liquidity. Overall, the rise in India’s forex reserves is a positive development, underscoring the country’s ongoing financial strength and its ability to weather global uncertainties.