India’s Forex Reserves Rebound Strongly, Gold Holdings See Sharp Rise

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Last Updated: 18th August 2025 - 03:37 pm

India’s foreign exchange reserves have shown a notable recovery, climbing by $4.74 billion to reach $693.62 billion in the week ending August 8. This rebound comes as a welcome reversal after the steep dip seen the prior week.

Reserves Recoup from Last Week’s Fall

The surge in reserves brings the total close to the all-time high of $704.89 billion recorded in September 2024. Analysts attribute the rebound to strategic RBI actions and underlying valuation gains.

Currency Assets and Gold Lead the Charge

Foreign currency assets, the bulk of India’s reserves, contributed significantly, rising by $2.37 billion to stand at $583.98 billion. Besides market interventions, the valuation uptick of non-dollar currencies like the euro, yen, and pound played a role in the lift. Gold reserves also grew sharply—by $2.16 billion—bringing holdings up to $86.16 billion.

SDRs and IMF Account See Gains

India’s Special Drawing Rights (SDRs) climbed by $169 million, reaching $18.74 billion. Separately, its position with the IMF also improved, rising by $45 million to $4.73 billion.

Intervention Balanced by Valuation Gains

Some of the reserve gains offset RBI’s forex interventions, including maturing swaps. Economists point out that heavy use of U.S. dollar/rupee swaps and spot market support typically drains reserves. But this time, favourable valuation changes—particularly from gold and other currencies—offset such outflows, leading to a net positive outcome.

Conclusion

India’s forex reserves have bounced back to near-record levels, buoyed by increases in foreign currency assets and gold. Gains in SDR and IMF holdings further strengthen the buffer. While RBI’s interventions typically dent reserves, this week’s valuation gains helped offset the impact — reaffirming India’s external stability and reserve management.

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