India’s foreign exchange reserves reached a new all-time high of $681.688 billion, $7.023 billion more than the previous record of $674.919 billion, according to the latest data released by the Reserve Bank of India’s latest data. The forex in 2024 alone increased by $60 billion.
Forex reserves, also known as foreign exchange reserves (FX reserves), are assets held by a country’s central bank or monetary authority, typically in reserve currencies such as the US Dollar, Euro, Japanese Yen, and Pound Sterling. They serves as a protective shield for domestic economic activities against global economic shocks.
Current estimates indicates that India’s foreign exchange reserves are sufficient to cover approximately one year of projected imports.
Additionally, the RBI’s data reveals that India’s foreign currency assets (FCA), which make up the largest portion of the forex reserves, increased by $5.983 billion, reaching USD 597.552 billion. Gold reserves increased $893 million to $60.997 billion.
India’s foreign exchange reserves rose by about $58 billion in 2023 while in 2022, it declined by $71 billion.
The RBI maintains a close watch on the foreign exchange markets and intervenes only to ensure orderly market conditions, focusing on containing excessive exchange rate volatility without targeting any predetermined level or band.
The central bank regularly intervenes in the market through liquidity management measures, including the sale of dollars, to prevent a sharp depreciation of the rupee.
