India's Forex Reserves Rise By $4.4 Billion After RBI's Large Dollar Swap

India's foreign exchange reserves rose sharply in the third week on December. The forex kitty rose nearly $4.4 billion to $693.3 billion in the week ending Dec. 19, according to the Reserve Bank of India data released on Friday.

The sharp rise can be attributed to the central bank's USD/INR buy-sell swap auction of $5 billion (about Rs 45,000 crore) on Dec. 16 to inject liquidity into the banking system. Banks sold US dollars to the RBI in exchange for rupees and simultaneously agreed to buy the same amount of the greenback at the end of the swap period. The transaction was settled on Dec. 18.

In the previous reporting week, reserves rose by $1.7 billion to $688.9 billion.

For the week ended Dec. 19, foreign currency assets, a major component of the reserves, increased by $1.6 billion to $559 billion, the data showed.

Expressed in dollar terms, the foreign currency assets include the effects of appreciation or depreciation of non-US units, such as the euro, pound, and yen, held in the foreign exchange reserves.

India's forex reserves, one of the largest in the world, can cover imports of over 11 months.

The value of the gold reserves rose by $2.6 billion to $110 billion during the week. The Special Drawing Rights (SDRs) also increased by $8 million to $18.7 billion. India's reserve position with the IMF was marginally up at $4.8 billion.

The RBI has announced it will conduct a USD/INR buy/sell swap auction of $10 billion for a tenor of three years on Jan. 13, 2026.