India’s foreign exchange reserves reach new high of $684 billion

NEW DELHI: India’s foreign exchange reserves reached a new high of $683.987 billion during the week ending 30th August, with an increase of $2.299 billion, as reported by the Reserve Bank of India (RBI). This surpasses the previous record of $681.688 billion, reflecting a consistent upward trend in the country’s reserves. In 2024 alone, India has added over $60 billion to its reserves, reinforcing its economic stability amidst global uncertainties.

Foreign exchange reserves serve as a crucial buffer for the economy, protecting it from external shocks and ensuring the country can meet its international obligations. These reserves are primarily composed of foreign currency assets (FCA), gold reserves, Special Drawing Rights (SDRs), and the reserve position in the International Monetary Fund (IMF). The latest RBI data reveals that India’s FCA, the largest component of its reserves, increased by $1.485 billion to $599.037 billion. Meanwhile, gold reserves rose by $862 million, bringing the total to $61.859 billion.

The consistent rise in reserves highlights India’s robust external sector and prudent economic management. These reserves are sufficient to cover about a year’s worth of projected imports, offering a strong safeguard against potential balance of payments crises. The accumulation of forex reserves has been a strategic focus for the RBI, particularly in light of global economic challenges, including fluctuations in oil prices, geopolitical tensions, and the impact of the COVID-19 pandemic.

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In the calendar year 2023, India added approximately $58 billion to its foreign exchange reserves, further strengthening its financial position. These reserves, held primarily in major currencies such as the US dollar, Euro, Japanese Yen, and Pound Sterling, play a vital role in maintaining the stability of the Indian rupee and supporting the country’s overall economic resilience.