India’s foreign exchange reserves surged to $653.97 billion in the week ending March 7, 2025, marking an increase of $15.26 billion, according to the Reserve Bank of India (RBI). This jump comes after the reserves had declined to $638.69 billion in the previous week, ending February 28, 2025, where they fell by $1.7 billion.
India’s forex reserves overview
The Reserve Bank of India releases weekly data on foreign exchange reserves, a key indicator reflecting the country’s external trade strength and economic stability. The reserves consist of four major components:
- Foreign Currency Assets (FCA) – The largest component, mainly held in major global currencies such as the US dollar, euro, pound sterling, and yen.
- Gold Reserves – India’s holdings of physical gold, which provide additional financial security.
- Special Drawing Rights (SDRs) – The reserve assets allocated by the International Monetary Fund (IMF).
- Reserve Position in the IMF – India’s financial position and quota contribution to the IMF.
RBI’s role in forex management
The RBI actively manages forex reserves through market interventions to prevent excessive volatility in the rupee-dollar exchange rate. By selling dollars when needed, the central bank ensures rupee stability while also maintaining adequate reserves for financial security.
The surge in forex reserves signals strong capital inflows, robust foreign investments, and stable trade balances. Analysts suggest that this rise could be due to an increase in foreign portfolio investments (FPI), remittances, and a positive global economic outlook.
While India’s forex reserves remain at comfortable levels, the RBI continues to monitor currency fluctuations closely. The reserves act as a buffer against external shocks and play a critical role in maintaining financial stability and supporting economic growth.
