India’s foreign exchange reserves increased for the second consecutive week, rising by $964 million to reach $675.16 billion for the week ending July 10, according to data released by the Reserve Bank of India (RBI). This follows a much larger jump of $7.26 billion in the previous week, signaling a recovery in the country’s external financial position.
The primary driver of the increase was foreign currency assets, which grew by $930 million to $546.51 billion during the reporting period. These assets, which include major global currencies such as the euro, pound sterling, and Japanese yen, fluctuate in value against the US dollar. Additionally, gold reserves rose by $24 million to $105.23 billion, while Special Drawing Rights (SDRs) with the International Monetary Fund (IMF) increased by $3 million to $18.626 billion. India’s reserve position with the IMF also edged up by $7 million to $4.793 billion.
The back-to-back weekly gains come after several weeks of decline, which had been driven by RBI’s intervention in the foreign exchange market to stabilize the rupee amid geopolitical tensions in the Middle East. Earlier this year, India’s forex reserves hit a record high of $728.494 billion in late February, but subsequent volatility led to sell-offs by the central bank to curb sharp currency fluctuations.
The RBI has reiterated that it does not target a specific exchange rate for the rupee but will continue to monitor market conditions and act as needed to ensure stability. Strong forex reserves are crucial for the country to manage import payments, meet external financial obligations, and navigate global economic uncertainties. Although reserves remain below the peak, the latest increase underscores an improving external financial landscape.