India’s foreign exchange reserves rose by $6.596 billion to $665.396 billion in the week ended March 28, extending gains for the fourth consecutive week, official data released by the RBI showed.

This significant jump is the highest in nearly five months after experiencing a downturn.

According to RBI data, the foreign exchange reserves have increased cumulatively by $20.1 billion in the last three weeks and by about $6.6 billion in the latest reporting week. Experts believe that the declines in the past few weeks were due to the loss of confidence in the Indian stock market by foreign investors.

As of March 28, gold reserves stood at $77.793 billion, while foreign currency assets stood at $565.014 billion, according to data.

On the other hand, the rupee appreciated by 0.6 percent against the US dollar during the same period.

The appreciation of the rupee is seen as a renewed confidence in foreign investment in Indian stock markets.

Any decline in reserves is often due to RBI intervention aimed at preventing a sharp depreciation of the rupee.

According to official estimates by the RBI, India’s foreign exchange reserves are sufficient to cover approximately 10-11 months of projected imports.

In 2023, India added about $58 billion to its foreign exchange reserves, reversing a cumulative decline of $71 billion in 2022. In 2024, the reserves were slightly over $20 billion.

Foreign exchange reserves, or FX reserves, are assets held by a nation’s central bank or monetary authority. They are mainly in reserve currencies such as the US dollar, with smaller holdings in the euro, Japanese yen, and pound sterling.

To prevent a sharp depreciation of the rupee, the RBI often intervenes by managing liquidity, including by selling dollars.

The RBI strategically buys dollars when the rupee strengthens and sells them when it weakens.