India's foreign exchange reserves have experienced a notable increase, climbing by $1.68 billion to reach $688.94 billion, according to the Reserve Bank of India (RBI). This surge reflects a strengthening of the country's external financial position, driven primarily by higher gold holdings and a modest rise in foreign currency assets.

The increase in gold reserves indicates a strategic move towards diversifying the composition of the forex reserves. The strengthening of gold reserves could be a result of a planned diversification strategy.

In addition to the rise in gold reserves and foreign currency assets, Special Drawing Rights (SDRs) and the country's reserve position in the International Monetary Fund (IMF) also saw slight upticks.

As of late April 2025, India held the position of the fourth-largest holder of foreign exchange reserves, sufficient to cover almost a year's worth of imports. The country's forex holding is the fourth largest after China, Japan and Switzerland.

It is important to note that fluctuations in foreign currency assets are influenced by both the RBI's market interventions and the changes in the value of foreign assets held within the reserves. Foreign currency assets, a major component of the reserves, include the effect of appreciation or depreciation of non-US units like the euro, pound, and yen.