India’s Forex Reserves Cross $638 Billion, Rise Continues

Why in the news?

India’s forex reserves surged by $7.65 billion, reaching $638.26 billion as of February 7, marking the third consecutive week of growth. The increase was driven by foreign currency assets and gold reserves, while SDRs saw a slight decline.

India’s Forex Reserves Cross $638 Billion, Rise Continues

Significant Growth in Forex Reserves

  • India’s foreign exchange reserves rose by $7.65 billion, reaching $638.26 billion as of February 7, according to the Reserve Bank of India (RBI).
  • This marks the third consecutive week of growth in India’s forex reserves.
  • The increase was primarily driven by a rise in foreign currency assets and gold reserves.

Breakdown of Reserve Components

  • Foreign currency assets (FCA), which form the largest part of the reserves, increased by $6.42 billion, reaching $544.10 billion.
  • Gold reserves saw a rise of $1.3 billion, bringing the total to $72.20 billion.
  • Special Drawing Rights (SDRs), however, declined by $11 million, settling at $17.87 billion.

Implications for India’s Economy

  • The rise in forex reserves strengthens India’s economic stability and global financial position.
  • A higher reserve buffer enhances the country’s ability to handle external economic shocks and currency fluctuations.
  • The consistent increase in reserves reflects strong capital inflows, robust export performance, and improved investor confidence.

This sustained growth in forex reserves is a positive indicator for India’s financial health and economic resilience.