India’s Forex Reserves Jump $6.99 Billion, Surpass $692.7 Billion Mark

India's foreign exchange reserves recorded a big jump of $6.99 billion to $692.72 billion as of the week up to May 23, based on the weekly report of the Reserve Bank of India (RBI) published on Friday.

Foreign currency assets, which account for a large component of these reserves, increased by $4.52 billion to $586.17 billion, the figures showed.

The value of gold reserves also experienced a significant boost, increasing by \$2.37 billion to \$83.58 billion during the same period, as per RBI’s figures.

Additionally, Special Drawing Rights (SDRs) went up by \$81 million to stand at \$18.571 billion, while India’s reserve position with the International Monetary Fund (IMF) improved by \$30 million, totaling \$4.401 billion.

This gain comes after a dip of $4.89 billion the week before, ending May 16, when the reserves had fallen to $685.73 billion. Earlier, for the week ended May 9, the forex reserves had gained by $4.5 billion to $690.62 billion.

The rising forex reserve kitty is key to the rupee's defense against the US currency. It indicates strong economic fundamentals of the nation and gives the RBI more leeway to stabilize the rupee during times of turmoil.

Thanks to a robust foreign exchange buffer, the RBI can pursue active intervention in both the spot and forward currency markets, injecting dollars whenever it is needed in order to stem the sharp fall in rupee value. In contrast, a dwindling reserve constrains the RBI from being able to control currency movements effectively.

At the same time, India's outward trade sector remains robust. Combined exports of goods and services grew by a strong 12.7% in April to \\$73.8 billion from \\$65.48 billion in the corresponding month last year, even as the world economy grapples with challenges like American tariff increases, the Commerce Ministry data showed.

Merchandise exports rose by 9.03% to $38.49 billion in April, with major gains arising in high-value industries such as electronics and engineering, reflecting India's growing base of manufacturing.

Exports of electronic goods rose by a whopping 39.51% to \$3.69 billion in April from \$2.65 billion during the same month last year. Engineering goods exports went up by 11.28% to \$9.51 billion from \$8.55 billion, while gems and jewellery exports climbed 10.74% to \$2.5 billion, an increase from \$2.26 billion during April last year.