India’s foreign exchange (forex) reserves reached a new peak of $692.3 billion as of the week ending September 20, 2024, according to a press release from the Reserve Bank of India (RBI) on September 27. This marks a significant increase of $2.838 billion from the previous week’s total of $689.4 billion on September 13. The reserve components, detailed below, reflect the diverse assets held to support India’s economic stability and manage currency market fluctuations.
Key Components of Forex Reserves
Foreign Currency Assets
- The largest component of the reserves, foreign currency assets rose by $2.057 billion, totaling $605.686 billion as of September 20, up from $603.629 billion on September 13.
- These assets, reported in US dollars, include the effects of appreciation or depreciation of other non-dollar currencies held, such as the euro, pound, and yen.
Gold Reserves
- Gold, the second-largest contributor, saw an increase of $726 million, bringing the total value to $63.613 billion from $62.887 billion the prior week.
Special Drawing Rights (SDRs)
- SDRs, a reserve asset in the International Monetary Fund (IMF), increased by $121 million, reaching $18.540 billion, up from $18.419 billion as of the previous week.
Reserve Position with the IMF
- The IMF reserve position decreased by $65 million, totaling $4.458 billion as of September 20, down from $4.523 billion in the previous week.
Role of RBI in Managing Forex Reserves
The Reserve Bank of India actively manages these reserves, intervening in the foreign exchange market to reduce volatility and support the stability of the Indian rupee. Such interventions impact foreign currency assets directly and are reflected in the fluctuations of the reserves. By maintaining a robust reserve level, the RBI ensures India’s ability to handle external shocks and supports confidence in the economy.