India’s external sector position strengthened further as the country’s foreign exchange reserves rose by $1.68 billion to $688.94 billion for the week which ended December 12, 2025. According to data released by the Reserve Bank of India. The increase was primarily supported by a sharp rise in gold reserves and a modest gain in foreign currency assets (FCAs).
Latest RBI Data on Forex Reserves
- As per the RBI’s weekly statistical release, India’s forex reserves increased from $687.26 billion to $688.94 billion during the reporting week.
- This follows a rise of nearly $1.03 billion in the previous week ending December 5, 2025.
- The steady upward trend indicates relative stability in India’s external accounts despite global economic uncertainties, including geopolitical tensions and fluctuating capital flows.
Foreign Currency Assets Show Moderate Growth
- Foreign Currency Assets (FCAs), the largest component of India’s forex reserves, rose by $0.91 billion to $557.79 billion.
- FCAs include holdings of major global currencies such as the US dollar, euro, pound sterling, and Japanese yen.
- The value of FCAs can fluctuate due to exchange rate movements.
- Appreciation or depreciation of non US currencies against the dollar directly impacts the reported value of reserves.
Gold Reserves Record a Strong Increase
- India’s gold reserves rose sharply by $0.76 billion, reaching $107.74 billion. The increase highlights the RBI’s continued focus on diversifying its reserve portfolio.
- Gold is considered a safe-haven asset, especially during periods of global financial uncertainty.
- By steadily increasing gold holdings, the RBI reduces overdependence on foreign currencies and strengthens long-term reserve security.
SDRs and IMF Reserve Position
- India’s Special Drawing Rights (SDRs) with the International Monetary Fund rose marginally by $0.01 billion to $18.74 billion.
- At the same time, India’s reserve position in the IMF also increased slightly by $0.01 billion, reaching $4.69 billion.
- Though small in value, these components add to India’s overall liquidity buffer at the global level.
What Are Foreign Exchange Reserves
Foreign exchange reserves are assets held by a country’s central bank in foreign currencies and other reserve assets. They are used to,
- Stabilise the domestic currency
- Meet external payment obligations
- Maintain confidence in the economy
- Manage volatility in global financial markets
In India, forex reserves consist of foreign currency assets, gold reserves, Special Drawing Rights (SDRs), and the reserve position with the IMF.
Key Takeaways
- India’s forex reserves rose by $1.68 billion to $688.94 billion.
- The increase was driven mainly by higher gold reserves and a rise in foreign currency assets.
- Gold reserves reached $107.74 billion, reflecting diversification strategy.
- Foreign currency assets increased to $557.79 billion.
- SDRs and IMF reserve position saw marginal increases.
- Strong forex reserves enhance economic stability and investor confidence.
Question
Q. The largest component of India’s foreign exchange reserves is:
A. Gold reserves
B. Foreign currency assets
C. Special Drawing Rights
D. IMF reserve position
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