New Delhi: India’s foreign exchange reserves stood at $691.5 billion, as of May 30, and are sufficient to fund more than 11 months of goods imports and about 96 per cent of external debt outstanding, RBI Governor Sanjay Malhotra said on Friday.
For the week ended May 30, the reserves dropped by $1.2 billion to break an 8-week rising trend. India’s foreign exchange reserves had recorded a robust increase of $6.99 billion to $692.72 billion in the preceding week ended May 23.
Changes in foreign currency assets, expressed in dollar terms, include the effect of appreciation or depreciation of other currencies held in the reserves.
External commercial borrowings (ECBs) and non-resident deposits have seen higher net inflows compared to the previous year.
The Reserve Bank of India (RBI) Governor said: “Overall, India’s external sector remains resilient as key external sector vulnerability indicators continue to improve. We remain confident of meeting our external financing requirements.”
The latest RBI data showed that India’s foreign currency assets (FCA), the largest component of foreign exchange reserves, stood at $586.167 billion. The RBI releases forex data every Friday.
According to RBI data, India’s forex reserves are still quite close to its all-time high of $704.89 billion, reached in September 2024. In 2024, the reserves rose by a little over USD 20 billion.
Central banks worldwide are increasingly accumulating gold as a safe-haven asset in their foreign exchange reserves amid uncertainty created by geopolitical tensions. The gold reserves currently amount to $83.582 billion. The share of gold maintained by the RBI in its foreign exchange reserves has almost doubled since 2021.
A strengthening of the country’s foreign exchange kitty also helps bolster the rupee vis-a-vis the US dollar.
An increase in the foreign exchange reserves reflects strong fundamentals of the economy and gives the RBI more headroom to stabilise the rupee when it turns volatile.
A strong forex kitty enables the RBI to intervene in the spot and forward currency markets by releasing more dollars to prevent the rupee from going into a free fall.
Meanwhile, India’s external sector has emerged stronger with total exports of goods and services clocking a robust 12.7 per cent growth in April to touch the $73.8 billion mark compared with the corresponding figure of $65.48 billion during the same month last year, despite the global economic uncertainties triggered by the US tariff hikes, according to figures compiled by the Commerce Ministry.
(IANS)
