Mumbai | June 29, 2025 — After weeks of steady gains, India’s foreign exchange reserves have recorded a modest dip of USD 1.02 billion, bringing the total to USD 697.93 billion as of the week ending June 21, according to fresh data released by the Reserve Bank of India (RBI) on Friday evening.
- The currency rose by $2.294 billion to $698.95 billion in the week ended June 13.
- Data up to June 20 showed assets in foreign currency declined by $360 million to $589.07 billion.
Gold reserves fell by $5.73 billion to $85.74 billion during the week, while special spinning rights fell by $85 billion to $18.67 billion, according to data from the central bank.
Central banks across the world have been hoarding gold as a safe haven in their forex reserves, and India is no exception. The proportion of gold in the foreign exchange reserves of the Reserve Bank of India (RBI) has almost doubled since 2021.
In 2023, India added about $58 billion to its foreign exchange reserves, while there was a cumulative decrease of $71 billion in 2022. In 2024, the reserves increased to a little over $20 billion.
India's foreign exchange (forex) reserves are sufficient to cover 11 months of the country's imports and about 96% of its external debt, Governor Sanjay Malhotra said while announcing the results of the Monetary Policy Committee (MPC) decisions.
The RBI governor expressed his confidence that India's foreign sector is resilient and key vulnerability indicators of the foreign sector are improving. Foreign exchange reserves, or forex reserves, are assets held by a country's central bank or monetary authority, primarily in reserve currencies such as the US dollar, with a minor proportion of the euro, Japanese yen and pound sterling.
The Reserve Bank of India (RBI) usually steps in to prevent a sharp fall in the value of the rupee by managing liquidity, including selling dollars. The RBI strategically buys dollars when the rupee is strong and sells them when it is weak.
External indicators remain strong: RBI
Despite the week's decline, the central bank said the country's external sector remains resilient. "India's foreign exchange reserves are sufficient to cover 11 months of the country's imports and about 96% of its external debt," Finance Secretary Sanjay Malhotra said while announcing the latest decisions of the Monetary Policy Committee (MPC).
He said key external vulnerability indicators have been steadily improving, indicating confidence in India's macroeconomic fundamentals. The Reserve Bank of India (RBI) has continued its policy of active foreign exchange management, buying dollars during rupee strength and selling during weakness to prevent excessive volatility.
Increase in share of gold in reserves
India's central bank has significantly increased the share of gold in the overall composition of its foreign exchange reserves in recent years. Since 2021, the share of gold has almost doubled. In 2023, the RBI added $58 billion to the reserves, recovering from a cumulative decline of $71 billion in 2022. Looking ahead to 2024, the reserves have increased by more than $20 billion.
This trend matches the approach of global central banks, many of which are accumulating gold as a shelter asset amid geopolitical uncertainty and foreign exchange market volatility.
Foreign exchange reserves held in reserve currencies such as the US dollar, euro, yen and pound sterling are important to protect against external crises and maintain confidence in the country's economy.