Foreign Currency Assets See a Drop While Gold Holdings Show Recovery; RBI Confident in Import Cover
Mumbai, July 27, 2025 – India’s foreign exchange reserves have continued their recent downward trend, registering a decline for the third consecutive week. According to official data released by the Reserve Bank of India (RBI), the country’s forex reserves fell by USD 1.18 billion to reach USD 695.49 billion for the week ending July 18.
This follows a drop of USD 3.06 billion in the previous reporting week, bringing the reserves down to USD 696.67 billion at that time.
Delving into the components of the reserves, Foreign Currency Assets (FCA), which form the largest portion, experienced a notable fall. They decreased by USD 1.201 billion to stand at USD 587.609 billion, likely being the primary driver behind the overall decline in total forex reserves.
However, there was a positive note from Gold reserves. After a decline in the previous week, gold holdings showed an impressive recovery, increasing by USD 150 million to reach USD 84.499 billion. This followed a fall of USD 498 million in the week prior. It’s worth noting that central banks globally are increasingly adding safe-haven gold to their reserves, and India is no exception. The share of gold maintained by the RBI in its foreign exchange reserves has nearly doubled since 2021, reflecting a strategic shift.
India’s Special Drawing Rights (SDRs) with the International Monetary Fund (IMF) also saw another dip, decreasing by USD 119 million to USD 18.683 billion.
RBI’s Stance and Future Outlook
Despite the recent declines, RBI Governor Sanjay Malhotra recently expressed confidence in the strength of India’s foreign exchange reserves. While announcing the outcomes of the Monetary Policy Committee (MPC) decisions, Governor Malhotra stated that India’s forex reserves are sufficient to cover 11 months of the country’s imports and approximately 96 percent of its external debt. This provides a strong buffer against global economic uncertainties.
Foreign exchange reserves, or FX reserves, are essentially assets held by a nation’s central bank or monetary authority. These are primarily in major reserve currencies like the US Dollar, with smaller portions typically held in the Euro, Japanese Yen, and Pound Sterling. The RBI actively manages these reserves, often intervening in the currency market by selling dollars to prevent steep depreciation of the Indian Rupee. Conversely, the RBI strategically buys dollars when the Rupee strengthens, indicating its proactive role in maintaining currency stability.
Looking at the broader trend, India had added around USD 58 billion to its foreign exchange reserves in 2023, a significant turnaround from a cumulative decline of USD 71 billion in 2022. In 2024, the reserves saw a rise of a little over USD 20 billion, even touching an all-time high of USD 704.885 billion at the end of September 2024.