India's forex reserves rise by $4.55 billion to $690.61 billion this week on surge in gold holdings

India’s foreign exchange reserves rose by $4.553 billion to $690.617 billion for the week ended May 9, driven primarily by a significant increase in gold assets, according to data released by the Reserve Bank of India (RBI) on Friday.This marks a reversal from the previous reporting week, when reserves had declined by $2.065 billion to $686.064 billion. The reserves had reached a record high of $704.885 billion at the end of September 2024, newas agency PTI reported. During the week under review, foreign currency assets (FCAs)—the largest component of the forex reserves—registered a modest rise of $196 million, reaching $581.373 billion. The FCAs, expressed in dollar terms, reflect the impact of currency movements such as the appreciation or depreciation of non-US currencies like the euro, pound, and yen held in the reserves.A major contributor to the overall increase was a sharp uptick in gold reserves, which surged by $4.518 billion to $86.337 billion, as per RBI data.Meanwhile, Special Drawing Rights (SDRs) declined by $26 million, standing at $18.532 billion. India's reserve position with the IMF also saw a decrease of $134 million, settling at $4.374 billion during the reporting week.These foreign exchange reserves, maintained by the country's central bank, are primarily held in major reserve currencies such as the US dollar, with smaller allocations in the euro, Japanese yen, and British pound sterling. The central bank actively manages liquidity in the currency markets by selling US dollars during periods of rupee weakness and accumulating reserves when the rupee strengthens.