India's foreign exchange reserves have experienced a notable increase, climbing by $1.033 billion to reach $687.26 billion for the week ending December 5, 2025, according to the Reserve Bank of India (RBI). This marks a recovery from the previous two weeks, during which the reserves had seen a decline.
The increase in overall reserves was largely driven by a significant rise in the value of gold holdings, which jumped by $1.188 billion to $106.984 billion. This surge in gold reserves reflects a broader strategy by the RBI to diversify its foreign exchange assets.
However, not all components of the forex reserves saw an increase. Foreign currency assets, which constitute a major portion of the reserves, decreased by $151 million to $556.88 billion. These assets are expressed in dollar terms and include the effects of appreciation or depreciation of non-US units like the Euro, Pound, and Yen. The Special Drawing Rights (SDRs) increased by $93 million, reaching $18.721 billion. India's reserve position with the International Monetary Fund (IMF) decreased by $97 million to $4.675 billion.
The RBI actively monitors and intervenes in the foreign exchange market to maintain orderly trading conditions. These interventions aim to moderate excessive volatility in the rupee's exchange rate and are not tied to any fixed exchange rate target.
India's foreign exchange reserves are among the world's largest and are sufficient to cover imports for over 11 months. The central bank also announced it would purchase government securities worth ₹1 lakh crore through open market operations during the month and conduct a currency swap worth $5 billion on December 16, involving buying dollars and selling them back three years later.
The increase in gold reserves is part of a larger trend where the RBI has been strategically increasing its gold reserves and reducing its holdings of US Treasury securities. This move signals a diversification of foreign exchange reserves away from dollar-based assets amidst global economic uncertainties. As of October 2025, India's gold reserves had already crossed the $100 billion mark, reaching $102.365 billion. The central bank had added 600 kilograms of gold, bringing its total reserves above 880 tonnes, valued at over $102 billion. This diversification aims to enhance the stability of India's foreign exchange reserves and reduce exposure to the volatility of the US dollar.
The rising value of gold has also increased its share in India's total reserves, reaching 13.9% as of late September 2025. The RBI has also been repatriating gold, bringing home 64 tonnes in the first half of the fiscal year 2025.
