India’s forex reserves jump by over 15 billion dollars, biggest rise in two years

India’s foreign exchange reserves witnessed a significant surge of USD 15.267 billion in the week ending March 7, reaching a total of USD 653.966 billion. This marks the highest weekly increase in over two years and follows a previous decline of USD 1.781 billion, which had brought the reserves down to USD 638.698 billion.

The sharp rise is largely attributed to a USD 10 billion forex swap executed by the Reserve Bank of India (RBI) on February 28. In this swap, the central bank purchased US dollars in exchange for rupees, a move aimed at stabilizing liquidity and market conditions. Such operations help in managing currency fluctuations and ensuring smooth financial transactions in the market.

A major contributor to the increase was the growth in foreign currency assets (FCA), which climbed by USD 13.993 billion to USD 557.282 billion. These assets reflect the value of India’s holdings in foreign currencies like the euro, pound sterling, and yen, and their value is subject to exchange rate fluctuations.

India’s gold reserves also saw a rise of USD 1.053 billion, bringing the total value to USD 74.325 billion. Additionally, Special Drawing Rights (SDRs) with the International Monetary Fund (IMF) increased by USD 212 million, reaching USD 18.21 billion.

However, not all components of forex reserves showed an upward trend. India’s reserve position with the IMF registered a slight dip of USD 69 million, standing at USD 4.148 billion. This minor decline did not significantly impact the overall upward movement of the reserves.

This increase comes after a phase of decline in India’s forex reserves, which had been impacted by market interventions and currency revaluation. At their peak, India’s foreign exchange reserves had reached an all-time high of USD 704.885 billion in September 2024. The recent boost provides a positive outlook for India’s economic stability and external trade position.