India’s forex reserves at $658.8 billion, sufficient for 11 months of imports: Sitharaman
New Delhi: India holds the fourth-largest foreign exchange reserves globally, amounting to $658.8 billion—sufficient to cover 11 months of imports, Finance Minister Nirmala Sitharaman has informed the Rajya Sabha.
During the question hour, she addressed concerns regarding foreign exchange reserves and the current account deficit, assuring members of the country's strong financial position.
"Even though there has been a little fall in the foreign exchange reserve, today the position is that we are the fourth largest in terms of foreign exchange reserves that we hold," she was quoted as saying by PTI.
India ranks behind China, Japan, and Switzerland in foreign exchange reserves.
Responding to queries about the rupee's depreciation, Minister of State for Finance Pankaj Chaudhary noted that the Indian currency had strengthened in recent months, contrasting with steeper depreciations in currencies such as the South Korean won and the British pound.
Chaudhary also addressed concerns about foreign investors withdrawing funds from Indian capital markets.
He characterised foreign portfolio investors (FPIs) as inherently short-term, noting that while they had booked profits in recent months, they continued to have confidence in India's markets.
"Even though foreign investors have taken out money from Indian markets since October last, in March this year, $3.84 billion has come into the country. This shows that the trend of foreign investors investing in has started. Our financial market has become robust, and this is a continuous process," he explained, according to the report.
On the current account deficit (CAD), he pointed out that it had steadily declined over the past two years.
"In 2022-23, due to Covid, the Current Account Deficit was $67.1 billion. It has come down to $26.1 billion (in 2023-24) and has further reduced to $21.4 billion (in 2024-25). The government is continuously making efforts to promote exports," he said.
Chaudhary emphasised that the Indian economy remains strong, highlighting the depreciation of other major currencies during the period from October 1, 2024, to March 26, 2025.
He noted that while the South Korean won depreciated by 10.5% against the US dollar, the Indonesian rupiah and Malaysian ringgit fell by 8.7% and 6.9%, respectively.
Meanwhile, the euro and the British pound weakened by 3.4% and 3.6%, respectively.
In a written response to a starred question on the rupee's depreciation, Sitharaman outlined various factors influencing the exchange rate, including the movement of the US dollar index, capital flows, interest rates, crude oil prices, and the current account deficit.
She stated that since the last quarter of 2024, the rupee, like other major Asian currencies, had depreciated against the US dollar due to global uncertainties.
"US Dollar Index rose 3.7% during October 1, 2024, to March 26, 2025, with all Asian currencies depreciating against the USD. The rupee has depreciated 2.2% against the US dollar during this period, least among major Asian currencies," she said.
She also pointed out that foreign portfolio investment outflows of approximately $19.9 billion from Indian markets during this period were a contributing factor to the rupee's depreciation.
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