Tuesday, 09 Jun, 2026
By: Damini Mehta
On 1st December 2023, RBI reported the country’s forex reserves at USD 604 billion. Image Source: IANS
The ongoing financial year 2023-24 marked a significant turnaround in the FPI inflows to the tune of USD 24.9 billion as of 6th December. This is against a net of outflows in the preceding two years.
In October of 2021, India’s foreign exchange or forex reserves reached an all time high of USD 642 billion. The period since then the country’s reserves took a hit as several global developments forced the Reserve Bank of India (RBI) to use the reserves to defend the rupee. But 2023 brought in some relief as the year saw the reserves take on some more weight owing to strong macroeconomic fundamentals amidst a recuperating global economy. On 1st December 2023, RBI reported the country’s forex reserves at USD 604 billion. It was the second time in 2023 that the reserve crossed the USD 600 billion mark marking an upward trend in reserves for the third straight week. The reserves have gained USD 6.1 billion in the reporting week, the largest gain since July and have risen by a total of USD 7.6 billion in the prior two weeks.
According to RBI governor Shaktikant Das, the forex reserves are on an upward trend owing to the rupee’s resilience against the dollar. According to him, compared to other emerging market economy (EME) currencies, the Indian rupee has exhibited low volatility in 2023. Additionally, the comeback recorded by the country’s forex reserves are also a result of growth in foreign portfolio investment (FPI). The ongoing financial year 2023-24 marked a significant turnaround in the FPI inflows to the tune of USD 24.9 billion as of 6th December. This is against a net of outflows in the preceding two years. However, FPI gains have come along with a declining foreign direct investment (FDI). Net FDI moderated to USD 10.4 billion in April-October 2023, half of what was a year ago at USD 20.8 billion.
An increase in the forex reserves can either be due to an inflow of US dollars or due to appreciation of foreign assets held in the reserves. On the other hand, a decrease in forex reserves might be due to outflow of USD or depreciation in valuation of assets held in the reserves. Forex reserves also include India's reserve tranche position in the International Monetary Fund and help provide the RBI a cushion to deal with external shocks.
Of the USD 604 billion reserves, Foreign Currency Assets occupied the largest share at USD 533 billion followed by gold and SDRs at USD 47.3 and 18.25 billion respectively. India’s reserve position in the IMF stood at USD 4.85 billion in the week ending 1st December, also a part of the forex reserves of the country.
Between March 2023 and now, forex reserves have increased by USD 25.59 billion. Foreign Currency Assets and gold within the forex components saw an increase of USD 26 billion whereas SDRs and reserve position in the IMF fell by USD 455 million in the same period.
In the week ending 25th November last year, India’s forex reserves stood at USD 550 billion whereas in the same time in 2021, the reserves were much higher at USD 637 billion. Since November 2018, India’s forex reserves have seen an increase of more than USD 200 billion. After increasing every year till October 2021, the reserves dipped to USD 550 billion last year before recuperating to breach the USD 600 billion mark twice this year.
