India Forex Reserves 2025: India's forex reserves jumped by USD 4.368 billion to USD 693.318 billion during the week ended December 19, the Reserve Bank
said on Friday. The overall kitty had increased by USD 1.689 billion to USD 688.949 billion in the previous week. Breakdown: Foreign Currency Assets For the week ended December 19, foreign currency assets, a major component of the reserves, increased by USD 1.641 billion to USD 559.428 billion, the data released by the central bank showed. Expressed in dollar terms, the foreign currency assets include the effects of appreciation or depreciation of non-US units, such as the euro, pound, and yen, held in the foreign exchange reserves. Gold Reserves Contribution Value of the gold reserves increased by USD 2.623 billion to USD 110.365 billion during the week, the RBI said. Gold reserves are the portion of forex reserves held in physical gold (or gold-valued assets) by the RBI. Gold acts as a diversification tool and a store of value; its reported value fluctuates with international gold prices. Other Components The Special Drawing Rights (SDRs) were up by USD 8 million to USD 18.744 billion. SDRs are an international reserve asset created by the IMF to supplement the official reserves of its member countries. They are not a currency but a global liquidity instrument, with their value based on a basket of major currencies---the US dollar, euro, Chinese yuan, Japanese yen, and British pound. SDRs help enhance financial stability by enabling countries to exchange them for freely usable currencies during periods of stress, supporting balance-of-payments needs, and functioning as the IMF’s unit of account. India's reserve position with the IMF was up by USD 95 million to USD 4.782 billion in the week, according to the RBI data.
Why forex reserves are important?
Fforex reserves are crucial for maintaining economic stability and protecting the country from external shocks, as they empower the RBI to intervene in currency markets and manage rupee volatility effectively. Robust reserves ensure uninterrupted payments for essential imports like crude oil, natural gas, and fertilisers, even during global disruptions or price surges, while acting as a vital buffer against financial turmoil, capital outflows, or geopolitical uncertainties by supporting balance-of-payments requirements.High reserve levels bolster investor confidence, signal macroeconomic strength, attract foreign investment, facilitate external debt servicing, and minimise the risk of financial crises, ultimately granting policymakers greater flexibility, enhancing resilience to international shocks, and promoting sustained economic growth and trade stability.
