India’s Forex Reserves Strengthen Near $700 Billion Mark

India’s external financial position has shown further strength with a rise in foreign exchange reserves. The latest data highlights the country’s ability to manage global uncertainties and external shocks. Strong forex reserves act as a safety cushion for the economy, helping maintain currency stability and boosting investor confidence during volatile global conditions.

Why in the News?

India’s foreign exchange reserves increased by $3.29 billion, reaching $696.61 billion as of December 26, 2025. The data was released by the Reserve Bank of India, indicating improved external sector resilience.

Details of the Latest Increase

• As per RBI data, India’s forex reserves rose by $3.29 billion in the week ending December 26, 2025.
• The rise was mainly supported by an increase in foreign currency assets, which form the largest component of total reserves.
• Movements in the value of non US currencies and changes in gold prices also influence reserve levels.
• The current reserve level is close to the $700 billion milestone.

What Are Forex Reserves?

• Foreign exchange reserves are assets held by a country’s central bank in foreign currencies.
• These typically include foreign currency assets, gold reserves, Special Drawing Rights (SDRs), and reserve position with the IMF.
• Forex reserves are used to manage exchange rate volatility, meet external payment obligations, and maintain confidence in the economy.
• A higher level of reserves strengthens a country’s ability to handle global financial shocks.

Why Strong Forex Reserves Matter

• Robust forex reserves provide multiple economic benefits.
• They help the RBI manage rupee volatility, ensure smooth import payments, and strengthen India’s position during global crises.
• High reserves also improve India’s creditworthiness, attract foreign investment, and support monetary policy operations.
• In a period of global uncertainty and fluctuating capital flows, strong reserves act as a key stabilising factor.

Key Summary At Glance

Question

Q. India’s forex reserves stood at how much as of December 26, 2025?

A. $650.12 billion
B. $689.32 billion
C. $696.61 billion
D. $705.80 billion