Synopsis
India's foreign exchange reserves have increased by $10.8 billion, reaching $676.3 billion by April 4, marking a positive trend for the economy and currency stability. The rise reflects strong economic fundamentals and allows for better intervention by the Reserve Bank of India to manage the rupee.Key Takeaways
- Forex reserves increased by $10.8 billion.
- Foreign currency assets rose by $9 billion.
- Gold reserves increased by $1.5 billion.
- RBI's interventions have stabilized the rupee.
- Merchandise trade deficit narrowed significantly in February.
Mumbai, April 11 (NationPress) India's foreign exchange reserves have jumped by $10.8 billion to reach $676.3 billion for the week ending April 4, based on information provided by the Reserve Bank of India on Friday.
This marks the fifth consecutive week of growth in forex reserves.
The foreign currency assets, which are part of India's reserves, increased by $9 billion to $574.08 billion, while the portion of gold reserves grew by $1.5 billion to $79.36 billion, as per the RBI’s weekly statistical report.
Additionally, Special Drawing Rights (SDR) rose by $186 million to $18.36 billion.
In the previous week ending March 28, 2025, India’s forex reserves had also increased, rising by $6.6 billion to a five-month peak of $665.4 billion.
The downward trend observed in earlier weeks, attributed to revaluation and interventions in the forex market by the RBI to mitigate rupee volatility, has been reversed over the past five weeks.
Previously, the country’s forex reserves had reached an all-time high of $704.885 billion in September 2024.
A growing foreign exchange reserve bolsters the rupee against the US dollar, which positively impacts the economy. The recent uptick in forex reserves has also contributed to a stronger rupee.
Enhanced foreign exchange reserves demonstrate robust economic fundamentals and provide the RBI with greater capacity to stabilize the rupee during periods of volatility.
A solid forex reserve allows the RBI to intervene in both the spot and forward currency markets by supplying additional dollars to prevent the rupee from falling sharply.
On the other hand, a dwindling forex reserve restricts the RBI’s ability to support the rupee in the market.
Furthermore, India's merchandise trade deficit has narrowed to its lowest level in over three years, at $14.05 billion in February, down from $22.99 billion in January, as exports remained steady while imports decreased, as reported by the Ministry of Commerce and Industry. This indicates a strengthening external sector of the economy, despite ongoing geopolitical tensions causing global economic uncertainty.
