India's forex reserves increased by $964 million to $675.16 billion in the week ended July 10, according to fresh data released by the Reserve Bank of India (RBI). The latest increase came after a much bigger rise in the previous week and shows that the country's foreign exchange reserves continue to recover.
Foreign currency assets remained the biggest reason behind the increase. This part of the reserves grew by $930 million to $546.51 billion during the week. These assets include major global currencies, and their value changes with the movement of currencies such as the euro, pound sterling, and Japanese yen against the US dollar.
Gold reserves also moved higher during the reporting week. RBI data showed that gold reserves increased by $24 million to $105.23 billion. India's Special Drawing Rights (SDRs) with the International Monetary Fund (IMF) also rose by $3 million to $18.626 billion. The country's reserve position with the IMF increased by another $7 million to $4.793 billion.
The latest figures came after India's forex reserves jumped by $7.26 billion in the previous week. These back-to-back gains suggest that the country's reserve position has improved after several weeks of decline.
Earlier this year, India's forex reserves reached a record high of $728.494 billion during the week ended February 27. Later, tensions in the Middle East put pressure on the Indian rupee. RBI sold US dollars in the foreign exchange market to reduce sharp currency swings, which lowered the reserve levels over the following weeks.
The central bank has said it will continue to watch the foreign exchange market closely and take action when needed to stabilize market conditions. RBI has also repeated that it does not aim to keep the rupee at any fixed exchange rate.
Strong forex reserves help the country pay for imports, meet foreign payment needs, and handle global financial risks more comfortably. Although the reserves remain below the record level, the latest increase shows that India's external financial position continues to improve.
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