Friday, 12 Sep, 2025
By: Yash Gupte
India’s Foreign Exchange Reserve has again increased after witnessing a rapid fall a few months back. According to information from the Ministry of Information and Broadcasting, India's foreign exchange reserves increased from $9.22 billion in 1991–1992 to $607 billion in 2021–2022.
India’s Foreign Exchange Reserve has again increased after witnessing a rapid fall a few months back. According to information from the Ministry of Information and Broadcasting, India's foreign exchange reserves increased from $9.22 billion in 1991–1992 to $607 billion in 2021–2022.Also, according to the Economic Survey 2021-22, India's total foreign currency assets, including gold jumped from $2161 million in 1950-51 to$633,614 million by the end of December 2022.It has multiplied 335 times since Independence. In spite of a rapid fall and rise in the forex reserve, as of November 2021, India remains the fourth largest forex reserve holder after China, Japan and Switzerland.
Foreign currency maintained by a country's central bank is known as its Forex reserves. It offers protection from unforeseen external shocks. Typically, reserve currencies like the dollar are used to maintain it. The fundamental goal of holding foreign exchange reserves is to preserve confidence in the monetary and exchange rate management policies as well as to preserve currency liquidity to absorb external shocks.
The Indian Foreign Exchange Reserve has witnessed a lot of ups and downs in the year 2022 due to Russia-Ukraine War, the fall in Rupee, irregular energy supplies, rise in the crude oil prices etc. The Forex reserves had declined by around $17 billion in the previous four weeks. As per the weekly statistical supplement published by the Reserve Bank of India, the forex reserve has again increased by $2.315 Billion to $573.87 Billion on July 29 after experiencing a fall for four straight weeks. India's foreign currency assets, which are the biggest component of the forex reserves, rose by $1.121 billion to $511.257 billion during the week ending July 29. For the first time in a year, foreign institutional investors became net buyers of Indian assets in July. The rupee and the nation's foreign exchange reserves have benefited as a result of this trend.
India has witnessed a rise and fall in its Forex reserve in last few months. The chart below provides data about India’s Forex Reserve from 28th January 2022 to 29th July 2022.
Source: Reserve Bank of India
The reserve showed an increasing trend between Jan 28 to Feb 25 and later there was a decreasing trend in the reserve till May 27 when the reserve once again crossed the $600 Billion mark. India’s Forex reserve on May 27 was noted at $601 Billion as it showed a great recovery of around $8 Billion from the previous $593.27 Billion on May 13 but the reserve reached a new low of $572.27 Billion on July 15.
Recently, the Forex reserve has shown a sign of recovery by $1.60 Billion on July 29 as it reached $573.87 Billion. One of the major reasons for decline in India’s Forex reserve is the Russia-Ukraine war which disrupted the global supply chains. The other major reason was the fall in rupee against the dollar and in order to apply a brake to it, the RBI intervened by selling off dollars in few months. RBI’s aggressive dollar sales had a negative impact and decreased India’s Forex Reserves.
In spite of this India has fared a far better when compared with South-Asian countries like Sri Lanka and Pakistan. Sri Lanka is left with a Forex reserve of only around $1.7 Billion and Pakistan has a Forex Reserve of only $8.57 Billion.
