India’s foreign exchange reserves surged to a record-breaking $651.5 billion as of May 31st, according to the Reserve Bank of India (RBI). This represents a jump of $4.84 billion from the previous week.
Key Points:
- This is the highest level ever recorded for India’s forex reserves.
- The previous high was $648.87 billion on May 10th.
- This growth is attributed to strong economic performance, effective policy measures, and vigilant monetary management.
Benefits of High Reserves:
- Enhanced Global Image: India’s strong reserves project a positive image on the world stage, attracting investment and boosting economic growth.
- Improved Trade & Industry: Ample forex reserves provide flexibility in managing the rupee’s exchange rate, benefiting domestic businesses involved in international trade.
- Greater Monetary Policy Flexibility: The RBI gains more leeway in managing interest rates and currency fluctuations in response to global economic challenges.
Details of the Increase:
- The rise in reserves is primarily due to a $5 billion increase in foreign currency assets, which can be affected by exchange rate fluctuations.
- Gold reserves and Special Drawing Rights (SDRs) saw minor declines.
Expert Opinion:
Sanjeev Agrawal, president of the PHD Chamber of Commerce and Industry, commended India’s achievement, highlighting its positive impact on trade, industry, and overall economic growth. He believes this strong position strengthens India’s global standing and provides the RBI with more control over the country’s economic stability.
Last 5 years Forex: According to the RBI, the Indian forex reserves in the past five years amounted to these numbers:
| Year | Forex Reserves (in million USD) |
|---|---|
| May 3, 2024 | 6,41,590 |
| January 26, 2024 | 6,16,733 |
| December 31, 2023 | 6,204,41 |
| September 29, 2023 | 5,869,08 |
| December 23, 2022 | 5,62,808 |
| December 31, 2021 | 6,35,080 |
| December 25, 2020 | 5,81,131 |
| December 20, 2019 | 4,54,948 |
Key Stats Relevant to Indian Forex Reserves
- In 1960, the Indian forex reserves had covered just 8.6 weeks’ worth of imports.
- In 1980, India’s forex reserves went over $7 billion, more than double that of China’s (about $2.55 billion at that time).
- In 1991, the reserves stood at $5.8 billion.
- By March 1997, India held $29.3 billion in reserves.
- India’s forex reserves reached the $100 billion mark for the first time in 2004.
- In FY 2009, India had to sell dollars worth about $35 billion in the spot markets after a 22 percent depreciation in the rupee against the dollar.
- In the same year, India also bought 200 tonnes of gold from the International Monetary Fund, amounting to about $6.7 billion.
- Amidst the Covid-19 pandemic of 2020, June saw India’s forex reserves crossing the $500 billion mark for the first time.
- One year later, Indian forex reserves exceeded the $600 billion mark for the first time.
- The all-time high of Indian forex reserves was recorded on September 8, 2021, at $642.453 billion.
- In March 2024, India’s foreign exchange reserves reached the highest record for a fourth consecutive week at $642.49 billion.
- India is one of the largest holders of gold in the world, and a significant portion of its Forex Reserves are in gold. In fact 2009, India bought a whopping 200 tonnes of gold from the International Monetary Fund.
