Despite a drop in foreign exchange reserves during the last week of May, the country is in a strong position

The foreign exchange reserves of the country have declined in the last week of May. According to the data of the Reserve Bank of India, during this period, the foreign exchange reserves declined from $1.237 billion to $691.485 billion.

RBI Governor Sanjay Malhotra said that despite this decline, the foreign exchange reserves are sufficient to meet the country's 11-month imports and about 96 percent of external debt. He said that overall India's external sector remains resilient and there are continuous improvements in it. We are confident of meeting our external financing requirements.

The latest RBI data showed that India's foreign currency assets, the largest component of the forex reserves, stood at $584.215 billion. In addition, gold reserves are currently at $84.305 billion. Central banks worldwide, including the RBI, are accumulating safe asset gold in their forex reserves. The RBI's share of gold held in its forex reserves has nearly doubled since 2021.

Despite a slight weekly decline, the forex reserves are nearing their all-time high of $704.89 billion from September 2024. In 2023, India added approximately $58 billion to its forex reserves, compared to a cumulative decline of $71 billion in 2022. Additionally, the forex reserves grew by just over $20 billion in 2024.