India’s foreign exchange reserves saw a significant uptick for the week ended July 25, 2025, climbing by USD 2.703 billion to reach USD 698.192 billion, according to data
India’s foreign exchange reserves saw a significant uptick for the week ended July 25, 2025, climbing by USD 2.703 billion to reach USD 698.192 billion, according to data released by the Reserve Bank of India (RBI). This rise marks a notable recovery following a dip of USD 1.183 billion the previous week. The increase reflects growth across several key components, including foreign currency assets, gold reserves, Special Drawing Rights (SDRs), and India’s reserve position with the International Monetary Fund (IMF).
Foreign currency assets, which form the largest portion of the reserves, rose by USD 1.316 billion, bringing the total to USD 588.926 billion. These assets include investments in foreign government bonds, treasury bills, and deposits with other central banks and international institutions.
These FCAs are expressed in dollar terms and take into account the fluctuations in the value of other global currencies such as the euro, pound sterling, and Japanese yen. The appreciation of these currencies against the US dollar can also contribute positively to the valuation of the foreign exchange reserves.
India’s gold reserves registered a solid increase of USD 1.206 billion, standing at USD 85.704 billion. Gold continues to play a pivotal role in India’s reserve strategy, offering a reliable hedge against inflation and currency volatility. The rise could be due to both revaluation gains as gold prices surged globally and possible purchases by the RBI.
Special Drawing Rights, the international reserve asset created by the IMF, went up by USD 126 million to USD 18.809 billion. SDRs supplement the member countries’ official reserves and can be exchanged among governments for freely usable currencies in times of need.
India’s reserve position with the IMF also increased modestly by USD 55 million, reaching USD 4.753 billion. This reflects the country’s contribution and drawing rights with the IMF and is a critical part of India’s liquidity buffer in times of economic stress.
The increase in forex reserves is a positive sign for the Indian economy, indicating financial strength, improved capital inflows, and a stable macroeconomic environment. These reserves help in:
A higher reserve also improves India’s creditworthiness in global markets and helps the government in maintaining a stable exchange rate policy.
The rise in reserves may also be partly attributed to capital inflows through Foreign Direct Investments (FDI) and Foreign Portfolio Investments (FPI). Additionally, global trends such as a weakening dollar, rising gold prices, and positive investor sentiment toward emerging markets like India may have contributed to the buildup.
The RBI has also been actively managing the reserves through market interventions and diversifying the portfolio to mitigate risks.
With global uncertainties persisting—from geopolitical conflicts to inflationary pressures—the current forex reserve levels provide strong insulation for India’s external sector. The continued buildup will allow the RBI to maintain exchange rate stability, ensure adequate import cover, and prepare the economy to weather external shocks.
The Reserve Bank of India is likely to continue its prudent management of the reserves, balancing between growth, liquidity, and financial stability.
FAQs
Forex reserves are external assets held by a country’s central bank, including foreign currencies, gold, SDRs, and IMF reserve positions. They ensure a nation’s ability to meet its international financial obligations and support the currency’s stability.
The rise of USD 2.703 billion was due to increases across multiple components—foreign currency assets, gold, SDRs, and IMF positions. This reflects strong capital inflows, currency valuation gains, and rising gold prices.
The RBI manages forex reserves by buying/selling foreign currencies in the market, investing in secure foreign assets, and diversifying the reserve portfolio to reduce risks.
Gold acts as a hedge against currency and market risks. It provides security and liquidity and helps in diversifying reserve holdings.
High reserves enhance economic stability, protect against external shocks, support the rupee, attract foreign investments, and give the government confidence to implement macroeconomic reforms.
