India’s Forex Reserves on the Rise: A Three-Week Streak

India's foreign exchange reserves have seen an increase for the third consecutive week, bouncing back from a four-month decline. As of February 7, reserves rose by USD 7.65 billion to USD 638.261 billion. This comes after a significant decrease aimed at curbing Rupee depreciation.

India's foreign exchange reserves have experienced a positive shift, marking a third successive week of growth after a lengthy period of contraction. According to the Reserve Bank of India (RBI), as of February 7, the reserves surged by USD 7.65 billion, reaching USD 638.261 billion.

This recent upturn follows a challenging phase wherein the country's reserves fell over 15 out of 16 weeks, plunging to an 11-month low. Significant reductions in reserves commenced post-September, following a historic peak of USD 704.89 billion, marking a near 10% drop from that pinnacle.

The persistent decline has been largely attributed to RBI's strategic interventions aimed at averting sharp depreciation of the Rupee, which is hovering around its record low against the US dollar. The RBI data highlights that core foreign currency assets (FCA) stood at USD 544.106 billion, while gold reserves were valued at USD 72.208 billion.

India's resilience in forex holdings is evidenced by the approximately USD 58 billion build-up in 2023 alone, which starkly contrasts with the USD 71 billion reduction seen in 2022. In 2024, further growth was recorded with an increase of over USD 20 billion. The RBI employs strategic liquidity management, including dollar transactions, to stabilize the Rupee's value.