Mumbai, Sep 5 (NationPress) India's foreign exchange reserves have increased by $3.51 billion to reach $694.23 billion for the week ending August 29, according to data released by the Reserve Bank of India (RBI) on Friday.

The foreign currency assets, which are a significant part of the reserves, saw a rise of $1.69 billion to $583.94 billion during the week. These assets, when measured in dollar terms, reflect the fluctuations in value of non-US currencies such as the euro, pound, and yen included in the foreign exchange reserves.

The gold component of the forex reserves also grew by $1.77 billion, bringing the total to $86.77 billion at the week's close. Central banks around the globe have been accumulating gold as a safe-haven asset in their forex reserves due to the uncertainties stemming from geopolitical tensions. Since 2021, the proportion of gold held by the RBI in its foreign exchange reserves has nearly doubled.

The special drawing rights in the forex reserves stood at $18.78 billion, reflecting an increase of $40 million.

A boost in the nation's foreign exchange reserves provides the RBI with greater capacity to bolster the rupee against the US dollar. Healthy forex reserves enable the RBI to take action in the spot and forward currency markets by supplying more dollars to prevent the rupee from plummeting and to manage its volatility.

According to RBI Governor Sanjay Malhotra, India's foreign exchange reserves are adequate to cover over 11 months of goods imports and approximately 96 percent of outstanding external debt.

He stated: "Overall, India’s external sector remains strong as key vulnerability indicators continue to improve. We are confident in fulfilling our external financing needs."

Additionally, India's merchandise exports saw a rise of 7.29 percent to $37.24 billion in July this year, compared to $34.71 billion in the same month last year, as per official data released on Thursday. This reflects a strengthening of the external sector.

Commerce Secretary Sunil Barthwal noted, "Despite a challenging global policy landscape, both services and merchandise exports have significantly increased in July and during FY26 thus far, outperforming global export growth." Major contributors to goods exports in July included engineering goods, electronics, drugs and pharmaceuticals, organic and inorganic chemicals, and gems and jewelry.