Saturday, 28 Feb, 2026
The central bank reiterated that it remains vigilant in monitoring developments in the foreign exchange market and intervenes as and when necessary to ensure orderly market conditions. Image Source: IANS
Foreign currency assets, which form the largest share of India’s reserves, increased by $1.64 billion to $559.42 billion during the week.
India’s foreign exchange reserves rose sharply by $4.36 billion to $693.32 billion in the week ended December 19, according to data released by the Reserve Bank of India, reflecting a stronger build-up compared to the previous week’s increase of $1.69 billion. The expansion in reserves comes at a time when global financial markets remain volatile due to shifting expectations around interest rate trajectories in advanced economies, geopolitical uncertainties, and fluctuating commodity prices. A robust reserve position enhances India’s external sector resilience, providing the central bank with greater room to manage balance-of-payments pressures and maintain confidence among global investors.
Foreign currency assets, which form the largest share of India’s reserves, increased by $1.64 billion to $559.42 billion during the week. These assets include holdings in major global currencies such as the US dollar, euro, pound sterling and Japanese yen, and their dollar value is influenced not only by actual inflows but also by valuation changes arising from movements in non-US currencies. The rise in FCAs suggests a combination of valuation gains and underlying stability in capital flows, even as emerging markets face intermittent pressure from global monetary tightening and risk-off sentiment.
Source: Reserve Bank of India
Gold reserves recorded a sizable increase of $2.62 billion, taking their total value to $110.36 billion. The jump largely reflects gains from higher international gold prices, underscoring gold’s role as a hedge against financial volatility and currency fluctuations. The RBI has steadily maintained gold as a key component of its reserve portfolio, aligning with broader global central bank trends that emphasise diversification and risk mitigation. Meanwhile, India’s reserve position with the International Monetary Fund edged up by $95 million to $4.78 billion, adding incrementally to the overall reserve stock.
The central bank reiterated that it remains vigilant in monitoring developments in the foreign exchange market and intervenes as and when necessary to ensure orderly market conditions. RBI interventions are aimed at smoothing excessive volatility in the rupee rather than defending any specific exchange rate level, allowing the currency to adjust in line with market fundamentals. With reserves hovering near record highs, India remains better placed to absorb external shocks, manage sudden capital flow reversals, and support macroeconomic stability amid an uncertain global economic environment.
