India’s forex reserves surged by $4.5 billion to $690.62 billion as exports rose 12.7% in April. Strong growth in electronics and engineering exports signals robust economic fundamentals and enhances RBI’s ability to stabilize the rupee amid global volatility.
India’s foreign exchange reserves soared by $4.5 billion to reach a record $690.62 billion for the week ending May 9, according to data released by the Reserve Bank of India (RBI) on Friday. This significant uptick underscores the country’s economic resilience and improved external sector performance, despite ongoing global uncertainties.
Foreign currency assets (FCAs), which make up the lion’s share of the forex reserves, rose modestly by $196 million to stand at $581.37 billion. The FCAs, expressed in dollar terms, also account for the valuation effects of non-US currencies such as the euro, pound, and yen held within India’s reserves.
Gold reserves increased slightly by $4.5 million to reach $86.33 billion, marking a steady rise amid fluctuating global commodity prices. However, special drawing rights (SDRs) fell by $26 million to $18.53 billion, while India’s reserve position with the International Monetary Fund (IMF) declined by $134 million to $4.37 billion during the reporting period.
The growth in forex reserves is a positive indicator of the country’s macroeconomic health. A robust forex kitty enhances the RBI’s ability to manage currency volatility, particularly by intervening in the spot and forward markets to stabilize the rupee. Such interventions become critical during times of sharp currency fluctuations, and a healthy reserve base gives the RBI the confidence to release dollars to prevent a free fall of the Indian rupee.
Economists view the rise in reserves as a signal of confidence in India’s economic fundamentals and global trade positioning. “The increase in foreign exchange reserves reflects the country’s strong external sector and provides a much-needed buffer against global financial volatility,” an RBI official noted.
Contributing to the positive outlook was the impressive growth in India’s external trade. As per Commerce Ministry data released on Thursday, the country’s total exports of goods and services jumped by 12.7% in April, hitting $73.80 billion, up from $65.48 billion in the same month last year. This comes amid persistent global economic challenges, including trade policy shifts and tariff hikes by the United States.
Merchandise exports climbed by 9.03% to $38.49 billion in April, driven primarily by high-performing sectors like electronics, engineering goods, and gems & jewellery. Notably, electronic goods exports surged by 39.51%, reaching $3.69 billion from $2.65 billion in April 2024. Engineering goods followed with an 11.28% rise to $9.51 billion, while gems & jewellery exports saw a 10.74% boost to $2.5 billion.
These figures signal a strong and diversified manufacturing base, which is crucial for sustaining India’s long-term growth trajectory. With forex reserves at a historic high and exports gaining momentum, India’s economy appears well-positioned to navigate external shocks and currency fluctuations more confidently.
