India’s Forex Reserves See Sharpest Rise in Two Years
India’s foreign exchange reserves saw their sharpest increase in over two years, with a massive $15.267 billion rise during the week ending March 7, 2025.
New Delhi: India’s foreign exchange reserves saw their sharpest increase in over two years, with a massive $15.267 billion rise during the week ending March 7, 2025. This surge followed the Reserve Bank of India’s (RBI) $10 billion forex swap on February 28, where the central bank bought US dollars in exchange for rupees to inject liquidity into the system.
Key Components of the Forex Reserves
The increase in foreign exchange reserves has been driven primarily by foreign currency assets, which surged by $13.993 billion to reach $557.282 billion. These foreign currency assets are impacted by changes in the value of non-US currencies such as the euro, pound, and yen.
Table of Contents
In addition, Special Drawing Rights (SDRs) saw a modest increase of $212 million, bringing their total to $18.21 billion. However, India’s reserve position with the International Monetary Fund (IMF) saw a slight dip, falling by $69 million to $4.148 billion, according to the latest RBI data.
India’s Economic Outlook for 2024-25
Despite the global economic uncertainty, high-frequency economic indicators suggest a sequential pick-up in India’s economic momentum during the second half of 2024-25. The country is on track to sustain its position as the fastest-growing major economy in the world, with IMF and World Bank projections forecasting GDP growth of 6.5% and 6.7%, respectively, for 2025-26.
Also Read: Bill Gates Praises India’s Innovations in Global Health and Agriculture
The recent RBI monthly bulletin highlighted that the Union Budget 2025-26 has strategically balanced fiscal consolidation with growth objectives. This approach includes a continued focus on capital expenditure (Capex) alongside measures to enhance household incomes and consumption. The effective capital expenditure-to-GDP ratio is projected to increase to 4.3% in 2025-26, up from 4.1% in 2024-25.
Signs of Economic Recovery in the Second Half of 2024-25
The bulletin also noted that India’s economy is recovering from the slowdown experienced in the first half of 2024-25. High-frequency data indicate that economic activity is expected to accelerate in the latter half of the fiscal year, marking a return to robust growth as India navigates through global uncertainties.
Stay tuned for further updates as India’s economic outlook strengthens, bolstered by robust forex reserves and an improving economic environment.
