India’s Forex Reserves Surge $7.26 Billion to $674.2 Billion; Gold Assets Rise $2.67 Billion

India’s Forex Reserves Rise $7.26 Billion to $674.19 Billion; Gold Holdings See Sharp Increase

India’s foreign exchange reserves registered a healthy weekly gain, rising $7.26 billion to $674.19 billion for the week ended July 3, driven by higher foreign currency assets and a strong increase in gold reserves, according to data released by the Reserve Bank of India (RBI).

The increase marks a rebound in the country’s reserve position, with all major components of the forex kitty posting gains during the reporting week.

Foreign Currency Assets and Gold Lead the Rise

Foreign Currency Assets (FCAs), which account for the largest share of India’s forex reserves, rose by $4.51 billion to $545.58 billion.

Gold reserves recorded the biggest jump after FCAs, increasing $2.67 billion to $105.21 billion, reflecting higher valuation and continued strength in the precious metal.

Meanwhile, Special Drawing Rights (SDRs) with the International Monetary Fund (IMF) increased by $65 million to $18.62 billion, while India’s reserve position with the IMF edged up $15 million to $4.79 billion.

The gains across all four components helped lift the country’s overall foreign exchange reserves during the week.

Reserves Still Below March Peak

Despite the latest increase, India’s forex reserves remain below the levels seen at the end of March.

According to RBI data, the reserve kitty is $16.92 billion lower than its March-end level. During this period, Foreign Currency Assets have declined by $6.71 billion, while gold reserves are down $10.19 billion.

On an annual basis, total forex reserves are $25.54 billion lower than a year ago. However, India’s gold holdings have risen by $20.36 billion over the same period, underscoring the RBI’s continued emphasis on strengthening its gold reserves despite fluctuations in overall foreign exchange assets.

From Record High to Recovery

India’s forex reserves had climbed to a record $728.49 billion in the week ended February 27 before coming under pressure amid geopolitical tensions in West Asia. The subsequent volatility in global markets and pressure on the rupee prompted the RBI to intervene in the foreign exchange market through dollar sales, leading to a decline in reserves over the following weeks.

The latest weekly increase suggests a partial recovery in India’s external buffers, with higher foreign currency assets and gold reserves providing support to the overall forex position.