India's Forex Reserves: A Strategic Shield Against Global Economic Shocks

India's foreign exchange reserves are robust enough to cover over 11 months of imports and nearly all external debt. Despite recent declines, reserves stand at $652.9 billion, reflecting strategic RBI interventions to stabilize the Rupee and safeguard economic stability.

According to a statement from the Reserve Bank of India (RBI) on Tuesday, the country's foreign exchange reserves are currently robust enough to fund more than 11 months of imports and cover approximately 96% of external debt by the end of June 2024. The reserves have increased by USD 6.4 billion during the 2024-25 period to reach USD 652.9 billion as of December 13, 2024.

The central bank highlighted in its bulletin that these reserves remain at sustainable levels, as evident from various reserve adequacy metrics, even though they have declined in 10 of the past 11 weeks, marking a fresh multi-month low. The week ending on December 13 saw a decline of USD 1.988 billion, leaving the total reserves at USD 652.869 billion.

The decline in reserves can be attributed to the RBI's active measures to prevent a steep depreciation of the Indian Rupee. A substantial forex reserve buffer is instrumental in shielding the domestic economy from global economic shocks. As per the latest figures, foreign currency assets, which comprise the largest portion of these reserves, stood at USD 562.576 billion.

(With inputs from agencies.)