India’s foreign exchange (forex) reserves have surged by $4.6 billion, reaching a seven-month high of $690.6 billion as of May 9, 2025, according to the latest data released by the Reserve Bank of India (RBI).
Key Drivers Behind the Surge
The increase in forex reserves was primarily driven by:
- Foreign currency assets (FCA), which rose to $581.37 billion, reflecting a marginal increase from the previous week.
- Gold reserves, which saw a significant jump of $4.51 billion, reaching $86.33 billion, as central banks globally continue to accumulate gold as a safe-haven asset amid economic uncertainties.
- Special Drawing Rights (SDRs), which declined slightly by $26 million, settling at $18.53 billion.
- India’s reserve position with the International Monetary Fund (IMF), which fell by $135 million, now standing at $4.37 billion.
Historical Context and Economic Implications
India’s forex reserves had previously hit an all-time high of $704.89 billion in September 2024. The latest increase signals strong external sector fundamentals, providing the RBI with greater flexibility to manage currency volatility and stabilize the Indian rupee, which currently stands at ₹85.60 against the US dollar.
Global and Domestic Factors
The rise in reserves comes amid geopolitical tensions and economic uncertainties, including India’s ongoing conflict with Pakistan and the Trump administration’s tariff threats. The RBI’s intervention in the forex market has been crucial in mitigating currency fluctuations.
Outlook for India’s Forex Reserves
With India’s export sector gaining momentum, analysts expect forex reserves to remain robust, ensuring adequate import cover for the country. The RBI is likely to continue its strategic interventions to maintain exchange rate stability and economic resilience.
