India's Forex Reserves Climb by $4.5 Billion to Reach $658.8 Billion

Synopsis

India's foreign exchange reserves have increased by $4.5 billion, reaching a four-month high of $658.8 billion. This growth, reported by the Reserve Bank of India, reflects a strengthening economy and a more robust rupee amidst recent trade deficit improvements.

Key Takeaways

Forex reserves increased by $4.5 billion.
Gold reserves rose by $2.8 billion.
Third consecutive week of growth.
Merchandise trade deficit narrowed.
Stronger rupee against global currencies.

Mumbai, March 28 (NationPress) India's foreign exchange reserves have increased by $4.5 billion, reaching a four-month peak of $658.8 billion for the week ending March 28, 2025, as reported by the Reserve Bank of India on Friday.

The Weekly Statistical Supplement from the RBI indicates that Foreign Currency Assets (FCAs) decreased by $1.6 billion to $558.86 billion. These assets, valued in dollars, reflect the impact of the appreciation or depreciation of non-US currencies such as the euro, pound, and yen.

Gold reserves experienced a rise of $2.8 billion, bringing the total to $77.2 billion.

In the previous week, ending March 14, the nation's forex reserves had increased by $0.305 billion, hitting $654.27 billion.

This marks the third consecutive week of growth, despite a recent downward trend attributed to revaluation and forex market interventions by the RBI aimed at reducing fluctuations in the rupee. The reserves peaked at an all-time high of $704.885 billion in September 2024.

Any uptick in the country's foreign exchange reserves also strengthens the rupee, which is beneficial for the economy. The recent rise in reserves has contributed to a stronger rupee.

Growing foreign exchange reserves signify strong economic fundamentals and provide the RBI with greater flexibility to stabilize the rupee during periods of volatility.

A robust forex reserve allows the RBI to intervene in both spot and forward currency markets by releasing more dollars, preventing the rupee from plummeting.

Conversely, a shrinking forex reserve limits the RBI's ability to support the rupee in the market.

Additionally, India's merchandise trade deficit has contracted to an over three-year low of $14.05 billion in February, down from $22.99 billion in January, as exports remained stable while imports decreased, according to recent data from the Ministry of Commerce and Industry.

This indicates a strengthening external sector amid geopolitical tensions causing economic uncertainty in global markets.

The nation's merchandise exports rose by 1.3 percent to $36.91 billion in February, compared to $36.43 billion in January, while imports fell by 16.3 percent to $50.96 billion from $59.42 billion the previous month.