India’s foreign exchange reserves have increased significantly by $4.36 billion to reach $693.32 billion for the week ending December 19, as per data released by the Reserve Bank of India (RBI). This rise reflects the RBI’s efforts to manage liquidity and ensure stability in the foreign exchange market.
The RBI closely monitors forex market developments and intervenes as necessary to maintain orderly trading conditions. These interventions aim to reduce excessive volatility in the rupee’s movement and are not tied to any fixed exchange rate target.
The recent boost in reserves was primarily fueled by the RBI’s USD/INR buy-sell swap auction valued at $5 billion, held on December 16 to infuse liquidity into the banking system. Banks participated by selling US dollars to the central bank in exchange for rupees, agreeing to repurchase the same amount of dollars at the swap period’s end.
In the preceding week ending December 12, India’s forex reserves had risen by $1.689 billion to $688.94 billion. During that period, gold reserves saw an increase of $758 million, reaching $107.741 billion, while Special Drawing Rights experienced a slight uptick to $18.735 billion.
The continuous growth in foreign exchange reserves aligns with robust capital inflows into the country. India has witnessed a notable upsurge in foreign direct investment commitments in the current fiscal year. Total FDI inflows in the first half of FY2025-26 amounted to $50.36 billion, marking a 16% rise compared to the same period last year, the highest ever for the initial half of any financial year.
Official data also indicates a substantial increase in gross FDI inflows over the years, escalating from over $34 billion in 2012-13 to surpass $80 billion in 2024-25.
