India’s Record Forex Reserves | RBI’s Cushion Amid US Trade Tensions

Foreign exchange reserves rise again as RBI strengthens its shield against trade shocks

What happens when a country’s savings rise at the same time its currency is under pressure? India has shown the answer. The Reserve Bank of India reported on 15 August 2025 that foreign exchange reserves touched 695.10 billion US dollars. 

The weekly RBI statistical report confirmed a gain of 1.48 billion dollars. This increase was driven mainly by foreign currency assets. The rise came even as trade tensions with the United States created uncertainty for exporters and importers.

A Sudden Climb In Reserves Catches Market Eyes

The RBI’s Weekly Statistical Supplement released on 22 August 2025 noted that India’s forex reserves stood at 695.10 billion dollars in the week ending 15 August 2025. This marked the second straight week of increase.

The fresh gain of 1.48 billion dollars came from higher foreign currency assets. Gold reserves fell, but the fall was more than offset by currency asset gains. Special Drawing Rights and IMF reserve positions also held steady.

This upward movement attracted market attention because it came after swings earlier in the month.

India Record Forex Reserves 2024 Set The Stage

The present cushion rests on a strong base built in 2024. In September 2024, India’s foreign exchange reserves touched an all-time peak of 704.89 billion dollars, as reported in the RBI bulletin that month. That peak became the benchmark.

Movements in 2025 are being compared against that record. The numbers may have moved up and down week to week, but they remain close to the record high.

Read More – Forex Reserves Rise to $698.1 Billion After $2.7 Billion Gain

Weekly Movement Of India’s Forex Reserves

The RBI figures show how reserves shifted during August 2025.
 

The trend tells a story of sudden swings. Still, the overall line moved upward, which helped restore market confidence.

RBI’s Reserve Buffer As Shield Against Trade Tensions

RBI Governor Sanjay Malhotra said in early August 2025 that reserves were enough to cover nearly 11 months of merchandise imports. This statement was part of the central bank’s monetary policy review.

Such import cover gives assurance to traders and investors. It means that dollar supply for imports is secure for almost a year. This is a powerful message when tariff disputes with the United States are raising risks for India’s external trade.
 

An import cover near one year gives comfort to markets and shows India’s ability to absorb shocks.

US Tariffs And Pressure On India’s Forex Reserves

The backdrop of these reserves is a tense trade environment. The United States raised tariffs on Indian goods in July and August 2025. This pressure has made the rupee vulnerable.

Reports said the rupee slipped close to 87.95 per US dollar in late August 2025. Dealers confirmed that the RBI intervened to prevent a sharper fall. Such defence steps often come through state-owned banks selling dollars on the RBI’s behalf.

This shows why high reserves matter. They give the RBI strength to act quickly when the rupee faces selling pressure.

RBI’s Market Operations And Dollar Forward Strategy In 2025

The RBI’s Monthly Bulletin in July 2025 showed that the central bank had trimmed its forward dollar book. In February 2025, the book stood at 88.7 billion dollars. By May 2025, it had been reduced to 65.2 billion dollars.
 

This strategy helped lower rollover risks. It also gave RBI more room for spot interventions. Instead of being locked into forward commitments, the bank kept more flexibility.

Reserve Bank Of India Forex Reserves Strategy For Stability

Reserves are not just numbers. They are built with a clear strategy. The RBI has been reducing its dependence on forward contracts. At the same time, it has been strengthening spot positions.

Also Read - What is the Forex Market? Meaning, Participants & How Trading Works

The composition of reserves also adds strength.
 

This mix allows RBI to manage risk better. When gold prices fall, currency gains can balance. When dollar moves are sharp, SDR values give another cushion.

Conclusion

India’s foreign exchange reserves stand today as a cushion against global storms. The RBI’s report of 15 August 2025 confirmed a rise to 695.10 billion dollars. This increase, driven by foreign currency assets, came even when gold holdings dipped.

The strategy is clear. Build flexibility by reducing forward contracts. Strengthen import cover so trade needs are secure. Maintain balance between gold, currency assets, and SDRs.

For businesses and investors, the message is direct. India has the strength to defend its currency. It has the space to absorb tariff shocks. It has the confidence of being among the world’s largest holders of reserves.

The coming months will bring new tests as trade talks with the United States continue. But the numbers show one fact. India is better prepared in 2025 than it was at any point in the last decade.

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