India's Forex Reserves Soar

India's foreign exchange reserves have witnessed a monumental increase, surging by USD 15.267 billion to reach a total of USD 653.966 billion in the week ending March 7. This marks the largest jump in over two years, following a previous week's decline of USD 1.781 billion.

Behind the Surge

The significant boost in reserves is primarily attributed to a USD 10 billion forex swap executed by the Reserve Bank of India (RBI) on February 28. This strategic move involved the central bank purchasing dollars in exchange for rupees, aimed at easing liquidity and stabilizing market conditions.

Contributing Factors

The increase in reserves was largely driven by a substantial rise in foreign currency assets, which climbed by USD 13.993 billion to USD 557.282 billion. These assets reflect the impact of fluctuations in non-US currencies such as the euro, pound, and yen. Additionally, India’s gold reserves saw an uptick, rising by USD 1.053 billion to USD 74.325 billion, while the Special Drawing Rights (SDRs) increased by USD 212 million to USD 18.21 billion.

A Slight Decline

However, India’s reserve position with the International Monetary Fund (IMF) experienced a minor decline of USD 69 million, standing at USD 4.148 billion, according to the RBI data.

Historical Context

This sharp rise comes after a period of decline in India's forex reserves due to market interventions and revaluation. At their peak, India’s forex reserves reached an all-time high of USD 704.885 billion in September 2024.