India’s Forex Reserves Rise $4.36 Billion to $693.3 Billion, Led by Sharp Increase in Gold Holdings

India’s foreign exchange reserves recorded a strong uptick, rising by $4.36 billion to $693.3 billion for the week ended December 19, according to the latest data released by the Reserve Bank of India (RBI). The increase reflects growing strength in the country’s external position, with gold reserves emerging as the primary driver of the overall rise.

India’s Forex Reserves Rise $4.36 Billion to $693.3 Billion, Led by Sharp Increase in Gold Holdings

Gold Reserves See Significant Weekly Surge

India’s gold holdings jumped by $2.62 billion to $110.36 billion during the reporting week, marking one of the sharpest weekly increases in recent months. The rise comes amid sustained strength in global gold prices, driven by heightened geopolitical uncertainty, central bank accumulation, and robust investment demand worldwide.

The increase in gold valuation significantly bolstered the overall forex reserves, reinforcing gold’s role as a strategic hedge within India’s reserve portfolio.

Foreign Currency Assets Continue to Expand

Foreign Currency Assets (FCAs), the largest component of India’s forex reserves, increased by $1.64 billion to $559.43 billion. FCAs include holdings in major global currencies such as the US dollar, euro, pound sterling, and Japanese yen.

The RBI noted that changes in FCA values also reflect valuation effects arising from fluctuations in non-US currencies against the dollar, underscoring the diversified nature of India’s reserve composition.

IMF Position and SDR Holdings Improve Marginally

India’s Special Drawing Rights (SDRs) with the International Monetary Fund rose marginally by $8 million to $18.74 billion, while the country’s reserve position with the IMF increased by $95 million to $4.78 billion. These incremental gains further supported the overall rise in the reserves during the week.

External Sector Remains Strong: RBI

Following its latest monetary policy review, the RBI highlighted that India’s forex reserves are adequate to cover more than 11 months of merchandise imports, a key indicator of external sector resilience. The central bank also emphasized that India remains well-positioned to meet its external financing requirements, even amid global economic volatility.

Long-Term Trend: Recovery and Growth in Reserves

India’s forex reserves have shown a notable recovery over the past three years:

• 2022: Cumulative decline of approximately $71 billion

• 2023: Addition of nearly $58 billion

• 2024: Net increase of just over $20 billion

• 2025 (so far): Estimated growth of $47–48 billion

This steady accumulation reflects improved capital flows, stronger balance of payments dynamics, and proactive reserve management by the central bank.

What Are Foreign Exchange Reserves?

Foreign exchange reserves are financial assets held by a country’s central bank and typically include foreign currencies, gold, SDRs, and IMF reserve positions. These reserves play a crucial role in ensuring currency stability, managing external shocks, and maintaining confidence among global investors.