India’s forex reserves slightly off all-time highs, decline by $1.71 billion to hit $651.99 billion | Mint (2024)

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India’s forex reserves slightly off all-time highs, decline by $1.71 billion to hit $651.99 billion | Mint? ›

India's forex reserves dropped $1.713 billion to $651.997 billion for the week ended June 28, the Reserve Bank of India (RBI) said on Friday. In the previous reporting week, the overall kitty had dropped $2.922 billion to $652.895 billion.

Synopsis. India's foreign exchange reserves decreased by $1.71 billion to reach $652 billion as of June 28, according to data released by the Reserve Bank of India (RBI). The previous week had seen an increase in reserves by $816 million to $653.7 billion as of June 21.

Foreign Exchange Reserves in India averaged 293081.90 USD Million from 1998 until 2024, reaching an all time high of 683990.00 USD Million in August of 2024 and a record low of 29048.00 USD Million in September of 1998.

India's foreign exchange reserves are sufficient to cover over 11 months of projected imports. In 2023, the RBI added about $58 billion to its foreign exchange kitty. In 2022, India's forex kitty slumped by $71 billion cumulatively.

Current projections indicate that India's foreign exchange reserves are sufficient to cover approximately one year's worth of projected imports. In the year 2023, India has added around $58 billion to its foreign exchange reserves.

China has by far the largest foreign currency reserves, with over two and a half times more than the second-largest reserve holder, Japan. When China's and Hong Kong's reserves are considered together, the total is more than $4 trillion.

Additionally, gold reserves increased by $1.2 billion, reaching $58.66 billion. According to a recent RBI report, India's foreign exchange reserves are now sufficient to cover over 11 months of projected imports. In the calendar year 2023, the RBI added approximately $58 billion to its foreign exchange reserves.

Forex Reserves India

As of June 2021, India has USD $608.081 billion forex reserves. India ranks fourth in the world in forex reserves. China is in first position, followed by Japan and Switzerland.

A decade ago, the Indian Rupee was one of the most volatile currencies in Asia. However, it has since become one of the most stable. This transformation is a testament to India's growing economic strength and effective management by the Reserve Bank of India (RBI).

Custodian-The RBI acts as the custodian of the country's foreign exchange reserves and manages exchange control. It dominates the market as a regulator, a player and the jury. Dollar/rupee rate- The RBI Act stipulates that the Central Government orders the rate at which the RBI shall buy or sell forex to banks.

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Reserve Bank of India Act and the Foreign Exchange Management Act, 1999 set the legal provisions for governing the forex reserves. Reserve Bank of India accumulates foreign currency reserves by purchasing from authorised dealers in open market operations.

Growing FX reserves

In the last five months, FX reserves have risen by an additional $39 billion standing at $684 billion in August 2024. FX reserves accumulate only if the RBI buys them from the market. Rising reserves have, therefore, been the RBI's deliberate policy choice.

Foreign Exchange Reserves in the United States increased to 36357 USD Million in July from 35243 USD Million in June of 2024.

According to the scheme issued by the RBI, an Indian resident can carry up to USD 3,000 in cash (per trip). Any balance amount can be carried in the form of Traveler's Cheque or Forex Cards. Additionally, Indian residents can carry up to USD 250,000 in Forex Card, FC Demand Draft, or Remittance per financial year.

As of July 2024, China's foreign exchange reserves totaled US$3.256 trillion, which is the highest foreign exchange reserves of any country. The management of foreign exchange reserves is governed by the State Administration of Foreign Exchange (SAFE) and the People's Bank of China.

India's reserve position with the International Monetary Fund (IMF) was down by $58 million to $4.622 billion in the reporting week. In the calendar year 2023, India added about $58 billion to its foreign exchange reserves. In contrast, India's forex reserves saw a cumulative decline of $71 billion in 2022.

At end-March 2005, India's total foreign exchange reserves (including foreign currency assets (FCA), gold, special drawing rights (SDR) and reserve tranche position (RTP) in the IMF) stood at US$141.5 billion, reflecting an increase of US$28.5 billion, as compared with US$113.0 billion at end-March 2004.

Reasons for High Forex Reserves

Rise in investment by foreign portfolio investors and increased foreign direct investments (FDIs).