India’s Forex Reserves Strong Enough to Cover 11 Months of Imports: RBI Governor
India’s foreign exchange reserves are in a strong position, offering a solid buffer against external economic pressures. Speaking during the Monetary Policy Committee (MPC) announcement on Friday, RBI Governor Sanjay Malhotra stated that the country’s forex reserves can cover more than 11 months of imports and 96% of external debt.
India’s External Sector Shows Resilience
The RBI governor emphasized that India’s external sector remains resilient, with several key vulnerability indicators showing signs of improvement.
“As of May 30, 2025, India’s foreign exchange reserves stood at USD 691.5 billion, sufficient to fund more than 11 months of goods imports and about 96% of outstanding external debt,” said Governor Malhotra.
External Inflows Strengthen the Reserve Position
India has witnessed higher net inflows in External Commercial Borrowings (ECBs) and non-resident deposits compared to the previous year, adding further strength to the country’s external balance sheet.
Breakdown of India’s Forex Reserves
According to the latest RBI data:
- Foreign Currency Assets (FCA): USD 586.167 billion
- Gold Reserves: USD 83.582 billion
The RBI updates forex data every Friday. As of now, India’s forex reserves are just shy of the all-time high of USD 704.89 billion, reached in September 2024.
Steady Growth in Forex Reserves Over Recent Years
India’s forex reserves have shown a steady upward trend:
- 2022: Decline of USD 71 billion
- 2023: Gain of USD 58 billion
- 2024: Increase of over USD 20 billion
This consistent growth highlights the country’s improved external position amid global financial uncertainty.
Gold as a Safe-Haven Asset
In line with global trends, central banks, including the RBI, are increasing their gold holdings. The share of gold in India’s forex reserves has nearly doubled since 2021, making it a vital part of the country’s financial safety net.
RBI’s Active Forex Management
The Reserve Bank of India continues to manage the foreign exchange market with strategic interventions:
- Selling USD when the Rupee weakens to prevent sharp depreciation
- Buying USD when the Rupee strengthens to build reserves
This proactive approach helps maintain currency stability and investor confidence.
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