The Reserve Bank of India published its half-yearly report on management of foreign exchange today. During the half-year period under review, reserves decreased from USD 705.78 billion as at end-September 2024 to USD 630.61 billion as at end-January 2025 and was at USD 668.33 billion as at end-March 2025. Although both US dollar and Euro are intervention currencies and the Foreign Currency Assets (FCA) are maintained in major currencies, the foreign exchange reserves are denominated and expressed in US dollar terms. Movements in the FCA occur mainly on account of purchase and sale of foreign exchange by the RBI, income arising out of the deployment of the foreign exchange reserves, external aid receipts of the Central Government and changes on account of revaluation of the assets.

RBI noted that at the end of December 2024, foreign exchange reserves cover of imports (on balance of payments basis) stood at 10.5 months (11.8 months at end-September 2024). The ratio of short-term debt (original maturity) to reserves, which was 19.1 per cent at end-September 2024, increased to 22.0 per cent at end-December 2024. The ratio of volatile capital flows (including cumulative portfolio inflows and outstanding short-term debt) to reserves increased from 67.8 per cent at end-September 2024 to 74.3 per cent at end-December 2024.