India's foreign exchange reserves dipped USD 6.711 billion in the week that ended February 6 to USD 717.064 billion, after having reached a new all-time high in the prior week, according to the Reserve Bank of India's latest data.

Foreign exchange reserves dipped substantially in the latest week, driven by a drop in gold reserves while foreign currency assets rose. Over the past few weeks, the forex kitty has been largely in an uptrend. Foreign exchange reserves touch record high of USD 723.774 billion last week.

Fall in Gold Reserves Drives Dip

For the reported week (that ended February 6), India's foreign currency assets (FCA), the largest component of foreign exchange reserves, stood at USD 570.053 billion, up USD 7.661 billion. The RBI data showed that gold reserves currently stood at USD 123.476 billion, down USD 14.208 billion from the previous week.

Reserves Sufficient for 11 Months of Imports: RBI

After the latest monetary policy review meeting earlier this month, the RBI had said that the country's foreign exchange reserves were sufficient to cover more than 11 months of merchandise imports.

RBI said India's external sector remains resilient, and it was confident of comfortably meeting the country's external financing requirements.

Forex Kitty's Yearly Growth

According to data, the forex kitty has increased by about 56 billion in 2025. In 2024, reserves rose by just over USD 20 billion. In 2023, India added around USD 58 billion to its foreign exchange reserves, in contrast to a cumulative decline of USD 71 billion in 2022.

RBI's Role in Managing Rupee

Foreign exchange reserves, or forex reserves, are assets held by a nation's central bank or monetary authority, primarily in reserve currencies such as the US dollar, with smaller portions in the Euro, Japanese yen, and Pound Sterling.

The RBI often intervenes by managing liquidity, including selling dollars, to prevent a steep depreciation of the rupee. The RBI strategically buys dollars when the Rupee is strong and ideally sells when it weakens. (ANI)