India’s Gold Reserves Rise as Forex Kitty Hits $693.62 Billion in Week Ending August 8

India’s foreign exchange reserves strengthened notably in the week ending August 8, climbing by $4.74 billion to $693.62 billion. The increase was supported by gains in foreign currency assets, gold holdings, special drawing rights, and IMF reserves, reflecting the RBI’s effective management strategy.

Forex Reserves Recover After Decline

India’s forex reserves rebounded after a sharp fall in the previous week, settling at $693.62 billion on August 8. This strong recovery keeps the reserve stockpile close to the all time high of $704.885 billion achieved in September 2024.

Foreign Currency Assets Drive Growth

The bulk of the rise came from foreign currency assets, which rose by $2.37 billion to $583.98 billion. These assets also reflect valuation effects of non dollar currencies like the euro, yen, and pound against the US dollar.

Gold Reserves Strengthen Further

Gold reserves surged by $2.16 billion to $86.16 billion during the week. This highlights the RBI’s growing reliance on gold as part of its reserve diversification, aligning with a global trend of central banks accumulating the precious metal.

SDRs and IMF Position Improve

Special Drawing Rights increased by $169 million to $18.74 billion. Meanwhile, India’s reserve position with the International Monetary Fund rose by $45 million to $4.73 billion, further strengthening the overall reserve profile.

RBI’s Market Interventions

The RBI actively intervenes in forex markets to prevent excessive rupee depreciation. By managing liquidity and adjusting dollar flows, the central bank ensures external stability while maintaining ample cover for imports.

Conclusion

India’s forex reserves showed a steady rebound in the week ending August 8, supported by gains across assets, particularly gold. While fluctuations remain a regular feature, the overall reserve position continues to provide a strong buffer for the economy.

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