Synopsis: India’s foreign exchange reserves rose by $1.03 billion to $687.26 billion for the week ended December 12, 2025, driven mainly by a sharp increase in gold reserves. The rise strengthens India’s external buffer amid ongoing global financial uncertainty.
India’s Forex Reserves Rise to $687.26 Billion
India’s foreign exchange reserves moved higher in the latest reporting week, offering a positive signal about the country’s external financial position.
Data released by the Reserve Bank of India (RBI) shows that total forex reserves increased by $1.03 billion to $687.26 billion for the week ending December 12, 2025.
This increase follows a decline in the previous week, when reserves had fallen by $1.877 billion to $686.227 billion.
Such weekly fluctuations are common and typically reflect valuation changes, currency movements, and global market dynamics rather than structural shifts.
Gold Reserves Lead the Weekly Gain
The primary driver behind the rise in total reserves was gold.
India’s gold reserves increased by $1.188 billion, taking total gold holdings to $106.984 billion.
Gold remains a critical component of India’s reserve basket. Its value often moves independently of major currencies, helping balance the overall reserve position during periods of market volatility.
The latest rise once again highlights gold’s role as a stabilising asset.
Foreign Currency Assets See Minor Decline
Despite the overall increase in reserves, foreign currency assets (FCAs) — the largest component of forex reserves — recorded a marginal fall.
- Foreign currency assets declined by $151 million
- Total FCAs stood at $556.88 billion
FCAs include holdings in major global currencies and overseas investments. Their valuation changes with movements in exchange rates against the US dollar.
Small weekly variations are considered normal and do not signal external sector stress.
SDRs Rise, IMF Position Dips
Other components of the reserve basket showed mixed trends:
- Special Drawing Rights (SDRs) rose by $93 million to $18.721 billion
- Reserve position with the IMF declined by $97 million to $4.675 billion
Such adjustments are routine and reflect regular international financial account movements monitored closely by the RBI.
Why Strong Forex Reserves Matter
Foreign exchange reserves act as a financial safety cushion for the economy. They help:
- Meet external payment obligations
- Support imports and trade financing
- Manage periods of global financial stress
- Boost investor confidence in the economy
Healthy reserves also give the RBI flexibility to manage market conditions and respond to sudden shifts in capital flows or currency demand.
RBI’s Approach to Currency Management
The RBI continues to closely monitor developments in the foreign exchange market. When required, it intervenes to ensure orderly market conditions and reduce excessive volatility in the rupee.
These actions are aimed at smoothing sharp movements rather than targeting any specific exchange rate level, allowing the rupee to reflect broader economic fundamentals.
Conclusion
Despite short-term fluctuations, India’s forex reserves remain near their elevated levels, reflecting disciplined reserve management and steady external inflows.
The latest increase — supported mainly by higher gold valuations — further strengthens India’s financial buffer against external risks.
As global markets remain uncertain, the country’s substantial reserve base continues to provide stability and confidence.
📌 Key Takeaway
India’s forex reserves rose to $687.26 billion in the week ended December 12, 2025, driven primarily by higher gold reserves. The strong reserve position enhances economic resilience, supports investor confidence, and provides a vital buffer amid ongoing global financial uncertainty.
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