India’s Forex Reserves Rise By $4.038 Billion To $698.268 Billion Driven by Surge in Gold Holdings

India’s foreign exchange reserves climbed by $4.038 billion to reach $698.268 billion in the week ended September 5, 2025, according to data released by the Reserve Bank of India (RBI). The rise was mainly fuelled by a surge in gold holdings, reflecting the central bank’s efforts to strengthen the country’s external buffer.

Breakdown of the Reserves

Gold reserves recorded a sharp increase of $3.53 billion, taking the total value to $90.299 billion. Foreign currency assets (FCAs), which form the largest share of the reserves, also rose by $540 million to $584.477 billion. These assets are impacted by the movement of major non-US currencies such as the euro, pound, and yen against the US dollar.

Meanwhile, Special Drawing Rights (SDRs) with the International Monetary Fund (IMF) dipped by $34 million to $18.742 billion. India’s reserve position with the IMF increased slightly by $2 million to $4.751 billion. In comparison, the previous week had seen reserves rise by $3.51 billion to $694.23 billion, showing continued momentum.

Importance Of Forex Reserves

Forex reserves serve as a critical financial safeguard for India. They help the country absorb external shocks such as volatile oil prices, global financial turbulence, and sharp currency fluctuations. A healthy reserve position also allows India to meet its import obligations without stress and supports confidence in the rupee during times of instability.

RBI’s Role in Managing Reserves

The Reserve Bank of India actively manages these reserves to maintain stability in the external sector. By monitoring capital inflows, trade balances, and exchange rates, the RBI ensures that the reserves are available for interventions when required. This management strategy provides an important cushion for India’s financial system.

Regular Monitoring

The RBI publishes its weekly forex data every Friday through its statistical supplement. This data offers insights into the country’s external strength and provides transparency on how India is placed in terms of global trade obligations and currency management.

Read More: India’s Gold Demand in 2025 to Hit 5-Year Low Amid Record Prices

Conclusion

India’s forex reserves rising by $4.038 billion to $698.268 billion, driven largely by a $3.53 billion jump in gold holdings, highlights the strength of the country’s external position. With reserves approaching the $700 billion mark, the RBI continues to demonstrate its ability to safeguard the economy against external shocks while ensuring stability in the currency market.

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