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India’s Forex Reserves – Trends as of 21st March 2025

7 Apr 2025 , 12:37 PM

India’s forex reserves have witnessed significant volatility in recent months. More recently, they are witnessing a sharp increase, reflecting RBI’s active management in response to global economic conditions and stabilising INR.

Trend in Forex Reserves:

As of 21^st March 2025, India’s total forex reserves increased by USD 6.6 bn to USD 665 bn. This puts the total increase since January lows at USD 42 bn. RBI’s swaps to improve domestic liquidity have also been a key factor in the recent months. In late February, RBI executed a USD 10 bn USD/INR swap to improve liquidity. A similar swap was also done in the week of 28^th March which could impact forex reserves in the next release.

Figure: Trends in India’s Forex Reserves

Source: RBI

What are the components of India’s Forex Reserves?

The bulk of India’s forex reserves are foreign currency assets. These mostly comprise of treasury bills. They account for 85%. Gold is the second largest component. India holds USD 78 bn of gold reserves. Following is the component wise week over week change.

Total Forex Reserves: +USD 6.6 bn to USD 665 bn

Foreign Currency Assets: +USD 6.2 bn to USD 565 bn
Gold: +USD 0.5bn to USD 78 bn
Reserve Portion In IMF: -USD 160 m to USD 4.4 bn
SDR: -USD 64 to USD 18.2 bn

Figure: Components of India’s Forex Reserves

Source: RBI

What is the significance of Forex Reserves?

Forex reserves hold paramount importance to emerging economies. Historically, issues related to exchange rates and forex reserves had severely impacted many Asian economies. A case in point being the Asian Financial Crisis, where countries with insufficient forex reserves fared worse.

Due to such historical reasons and being amongst the most important players in global trade, both Indian and China maintain a significant amount of forex reserves. While China ranks #1 in its forex reserves, India Ranks #4.

Figure: Top 5 countries with highest forex reserves