India ranks as the fourth-largest holder of foreign exchange reserves, with a total of $658.8 billion as of March 25, 2025, sufficient to cover 11 months of imports, Finance Minister Nirmala Sitharaman informed the Rajya Sabha on Tuesday.
Responding to supplementary questions during the Question Hour, Sitharaman addressed concerns regarding foreign exchange reserves and the current account deficit.
"I want to assure you that total foreign exchange reserves as of March 25, 2025, stand at $658.8 billion. We are the fourth largest in terms of foreign exchange reserves globally, meaning this amount is sufficient to cover 11 months of our imports," she stated.
While acknowledging a slight decline in reserves, the minister emphasised that India remains among the top four nations with significant foreign exchange holdings.
India is the fourth largest nation in terms of foreign exchange reserves after China, Japan and Switzerland.
Earlier, responding to concerns of members on the depreciating value of the Indian rupee, Minister of State for Finance Pankaj Chaudhary said the local currency has strengthened in the last few months while several other countries, including South Korea and the United Kingdom, had depreciated more.
On foreign investors pulling out money from the Indian capital markets, the minister said, "Foreign portfolio investors are by nature 'fly-by-night', and FPIs have booked their profits in recent months in the Indian markets and repose confidence in Indian markets."
In the last 10 years, he said, the confidence of foreign investors in Indian markets and economy has been reposed.
"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 has started. Our financial market has become robust, and this is a continuous process," Chaudhary noted.
On the current account deficit, he said, In the last two years, it has constantly been coming down.
"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 come down to $21.4 billion (in 2024-25). The government is continuously making efforts to promote exports," he said.
Noting that the Indian economy is in a strong position, Chaudhary said, "While the South Korean won depreciated 10.5% against the US dollar, the Indonesian rupiah and Malaysian ringgit depreciated by 8.7% and 6.9%, respectively, during this period."
Further, all G10 currencies (except the Swedish Krona) also depreciated from Oct. 1, 2024, to March 26, 2025, with the euro and British pound depreciating by 3.4% and 3.6%, respectively. "This shows that the fundamentals of the Indian economy are strong under Prime Minister Narendra Modi's leadership," the minister of state said.
In her written reply to a starred question on the depreciation of the rupee, Sitharaman said various domestic and global factors influence the exchange rate of the rupee (INR) against the US dollar (USD), such as the movement of the dollar index, trend in capital flows, level of interest rates, movement in crude prices, current account deficit, etc.
Since the commencement of the last quarter of the calendar year 2024, the rupee, along with other major Asian currencies, depreciated against the US dollar amid global uncertainties, she said.
"The US Dollar Index rose 3.7% from Oct. 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, the least among major Asian currencies," she added.
"Further, foreign portfolio investment (FPI) outflows of around $19.9 billion from Indian markets during Oct. 1, 2024, to March 26, 2025, were also one of the contributory factors for the depreciation of INR against the USD," she said.
(With inputs from PTI.)
In her written reply to a starred question on the depreciation of the rupee, Sitharaman said various domestic and global factors influence the exchange rate of the rupee (INR) against the US Dollar (USD), such as the movement of the Dollar Index, trend in capital flows, level of interest rates, movement in crude prices, current account deficit etc.
Since the commencement of the last quarter of the calendar year 2024, the rupee, along with other major Asian currencies, depreciated against the US dollar amid global uncertainties, she said.
"US Dollar Index rose 3.7% during Oct. 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 added.
"Further, foreign portfolio investment (FPI) outflows of around $19.9 billion from Indian markets during Oct. 1, 2024, to March 26, 2025, was also one of the contributory factors for the depreciation of INR against the USD," she said.
(With inputs from PTI)
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