India's Foreign Exchange Reserves Reach Comfortable Levels, Remain Among Top 4 Holders Globally

India's foreign exchange reserves have been found sufficient enough to cover nearly 90 percent of its current external debt and approximately 11 months of imports as per the latest Economic Survey published on Friday.

According to the survey, India's foreign exchange reserves stood at USD 640.3 billion as of December 31, 2024, more than surpassing the USD 700 billion benchmark. This represents a decrease from its peak, but still strong enough to support the country against external economic vulnerabilities.

The Indian government's efforts have paid off as forex reserves supported by net positive capital inflows increased by USD 27.1 billion in 2024. The majority of this increase came from foreign currency assets, bolstering India's overall reserve position.

Despite a significant nearly USD 70 billion drop in its peak value, India remains among the world's largest foreign exchange reserve-holding countries in 2024, ranking fourth globally alongside China, Japan, and Switzerland.

The reserves are also backed by net capital inflows which rose. This trend is attributed to fluctuations in the country’s global economy during the entire year of 2024.

Interestingly, gold bullion holdings nearly touched their highest levels since World War II as a result of accumulation by central banks of emerging markets globally. However, uncertainties have led to changes in trends due to an increasing preference for non-traditional currencies.