Gold : India’s foreign exchange reserves climbed to a fresh record in the week ended January 23, underscoring the strength of the country’s external position amid steady inflows and supportive central bank management. Latest data released by the Reserve Bank of India showed a broad-based rise across key reserve components, pushing the overall stockpile to its highest level on record.

Strong Weekly Increase Lifts Total Reserves

During the reported week, India’s total foreign exchange reserves rose by USD 8.053 billion to USD 709.413 billion. This sharp increase marked a continuation of the recent upward trend, with reserves expanding consistently over the past several weeks. The latest figure comfortably surpassed the previous peak of USD 704.89 billion, which had been recorded in September 2024.

Foreign Currency Assets Remain the Largest Component

Foreign currency assets, which make up the largest share of the country’s reserves, also registered a notable increase. As of the week ended January 23, these assets stood at USD 562.885 billion, reflecting a rise of USD 2.367 billion from the prior week. Foreign currency assets include holdings in major global currencies such as the US dollar, euro, Japanese yen, and pound sterling, and their valuation can fluctuate due to exchange rate movements.

Gold Holdings See a Significant Jump

A major contributor to the weekly rise came from gold reserves, which increased sharply during the period. RBI data showed that the value of gold held as part of India’s reserves rose by USD 5.635 billion to USD 123.088 billion. Changes in global gold prices often have a direct impact on the valuation of gold reserves, making them an important factor in overall reserve movements.

Reserves Provide Comfortable Import Cover

Following its monetary policy review meeting in early December, the central bank had highlighted the adequacy of India’s reserve position. At that time, the RBI stated that foreign exchange reserves were sufficient to cover more than 11 months of merchandise imports. This level of import cover is generally viewed as a sign of external sector stability and provides a buffer against global financial volatility.

External Sector Seen as Resilient

The central bank has consistently expressed confidence in the country’s ability to meet its external financing needs. According to the RBI, India’s external sector remains resilient, supported by strong capital flows and prudent macroeconomic management. Adequate reserves also give policymakers greater flexibility to respond to global shocks and changing financial conditions.

Steady Accumulation in Recent Years

Data trends over the past few years show a pattern of gradual reserve accumulation, with some year-to-year variation. In 2025 so far, India’s foreign exchange reserves have increased by around USD 56 billion. This follows a rise of just over USD 20 billion during 2024. In 2023, reserves expanded by approximately USD 58 billion, reversing a sharp cumulative decline of about USD 71 billion recorded in 2022.

Why Forex Reserves Matter

Foreign exchange reserves are assets held by a country’s central bank to support the national currency and meet international payment obligations. These reserves are typically maintained in reserve currencies, with the US dollar accounting for the largest share globally. A healthy reserve position helps maintain investor confidence and supports financial stability.

RBI’s Role in Currency Management

The RBI actively uses its reserves as part of its currency management strategy. The central bank intervenes in the foreign exchange market to manage liquidity and limit excessive volatility in the rupee. It generally buys dollars when the rupee is strong and sells them during periods of weakness, aiming to prevent sharp and disorderly movements in the exchange rate rather than targeting a specific level.