In 2024, India’s foreign exchange (forex) reserves hit a record high of $689 billion, marking a $66 billion increase from the previous year. This substantial growth follows a period of volatility, where reserves fell by $71 billion in 2022 but rebounded with a $60 billion increase in 2023. India now ranks fourth globally in terms of forex reserves, trailing only China, Japan, and Switzerland.
This increase is primarily due to sustained foreign inflows, increased gold holdings, and overall economic stability. The Reserve Bank of India (RBI) actively manages these reserves to maintain the rupee’s exchange rate and ensure financial stability in times of external economic shocks, such as fluctuations in global oil prices or trade imbalances. A higher forex reserve level enhances India’s ability to meet its international financial obligations and provides a buffer against external volatility.
In terms of growth, India’s forex reserves saw a 7.7% rise in 2024, the highest among major economies. Comparatively, Switzerland’s reserves grew by 2.6%, China by 1.3%, and Russia by 1.1%, while Japan experienced a 5.8% decline during the same period(
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India’s high reserves not only bolster confidence among foreign investors but also help to maintain the country’s international credit rating. The reserves also offer the flexibility to finance imports, manage currency depreciation, and intervene in foreign exchange markets when necessary, supporting both economic growth and financial stability. This strategic management has contributed to India’s resilience amidst global economic uncertainties.
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