Mumbai– India’s foreign exchange reserves jumped by $6.6 billion to reach a five-month high of $665.4 billion for the week ending March 28, 2025, according to data released by the Reserve Bank of India (RBI) on Friday.
The RBI’s Weekly Statistical Supplement also showed that the country’s gold reserves—part of the overall forex holdings—rose by $519 million to $77.8 billion.
This marks the fourth straight week of growth in India’s foreign exchange reserves, following a $4.5 billion increase to $658.8 billion in the previous week ending March 21. The recent upward trend has reversed earlier declines, which were primarily due to valuation adjustments and the RBI’s interventions in the foreign exchange market aimed at reducing rupee volatility.
India’s forex reserves had previously reached a record high of $704.89 billion in September 2024.
A rising foreign exchange reserve position generally supports the Indian rupee against the U.S. dollar and is considered a positive indicator of the country’s economic fundamentals. The latest increase has contributed to the rupee strengthening in recent sessions.
Higher reserves also give the RBI more flexibility to stabilize the currency by intervening in both spot and forward currency markets. This means the central bank can release more U.S. dollars into the market to prevent the rupee from depreciating sharply. On the flip side, when reserves decline, the RBI has less capacity to step in and support the currency.
In a related development, India’s merchandise trade deficit narrowed to a 3-year low of $14.05 billion in February, down from $22.99 billion in January, according to the Ministry of Commerce and Industry. The improvement came as exports held steady and imports declined, reflecting a stronger external sector despite ongoing global geopolitical and economic uncertainties.
India’s merchandise exports rose by 1.3% to $36.91 billion in February, compared to $36.43 billion in January. Meanwhile, imports dropped by 16.3% to $50.96 billion, down from $59.42 billion the previous month. (Source: IANS)
