India’s Forex Reserves Surge To $665.4 Billion; Rupee Strengthens As Trade Deficit Narrows

India’s forex reserves rose sharply by $6.6 billion to touch a five-month high of $665.4 billion for the week ending March 28, 2025, according to data released by the Reserve Bank of India (RBI) on Friday.

The RBI’s Weekly Statistical Supplement showed that the country’s gold reserves, a key part of the forex kitty, increased by $519 million to reach $77.8 billion.

This marks the fourth consecutive week of gains in India’s foreign exchange reserves, following a $4.5 billion rise to $658.8 billion in the week ended March 21.

Earlier, reserves had declined due to revaluation and RBI’s interventions to curb rupee volatility. That trend has now reversed.

In September 2024, India’s forex reserves hit a record high of $704.885 billion.

A rising foreign exchange reserve strengthens the rupee against the US dollar, which supports economic stability.

The rupee has already shown improvement alongside the recent surge in reserves.

Higher reserves signal strong economic fundamentals and give the RBI more flexibility to manage currency volatility.

The central bank can release dollars in the spot and forward markets to prevent sharp falls in the rupee.

In contrast, falling reserves limit RBI’s ability to intervene effectively in currency markets.

Meanwhile, India’s merchandise trade deficit dropped to a three-year low of $14.05 billion in February, down from $22.99 billion in January.

The Ministry of Commerce and Industry reported stable exports and falling imports.

Exports rose by 1.3 percent to $36.91 billion in February from $36.43 billion in January.

Imports declined by 16.3 percent to $50.96 billion from $59.42 billion.

The data indicates a stronger external sector despite global uncertainty driven by geopolitical tensions.

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