India’s foreign exchange reserves have risen to $658.1 billion as of the week ending November 29, marking a $1.5 billion increase after eight consecutive weeks of decline. The Reserve Bank of India (RBI) reported the rise on Friday, following a drop of $1.31 billion to $656.58 billion in the previous week.

The recent increase in reserves is attributed to a combination of fluctuating foreign portfolio investments (FPIs) and the RBI's intervention in currency markets. In 2023, foreign investors have injected Rs 1.75 lakh crore into India's debt and equity markets, but outflows have also been significant.

In November, Rs 32,210.22 crore left Indian bonds and equities, while a larger Rs 96,358 crore was withdrawn in October. These movements have placed pressure on the Indian rupee, which has faced volatility amid a strengthening US dollar and foreign capital outflows.

The RBI, which plays a critical role in stabilizing the rupee, typically uses its foreign currency reserves to intervene in the market, buying or selling dollars to prevent excessive volatility. For the week ending November 29, India's foreign currency assets—comprising the largest portion of its forex reserves—fell to $568.85 billion. Gold reserves, another important component, decreased to $66.98 billion.

Despite the fluctuations, India's foreign exchange reserves remain at a healthy level, capable of covering approximately one year’s worth of imports. As of Friday, gold prices saw an uptick, trading at Rs 76,520, after surpassing Rs 77,000 earlier in the week. India’s forex reserves have been on a decline since reaching an all-time high of $704.89 billion in September.

The reserves fell primarily due to RBI's market interventions aimed at preventing sharp depreciation of the rupee. Over the past year, India has added around $58 billion to its forex reserves, a stark contrast to the $71 billion decline in 2022. Foreign exchange reserves, which consist of assets held by the central bank in reserve currencies such as the US Dollar, Euro, Japanese Yen, and Pound Sterling, provide a vital buffer against global economic shocks.

The RBI carefully monitors these markets and intervenes only when necessary to ensure stability in the currency market. In recent years, the Indian rupee has become one of Asia’s most stable currencies, owing largely to the RBI’s proactive management of its foreign exchange reserves. The central bank continues to adopt a strategic approach, buying dollars when the rupee is strong and selling when it weakens, thus supporting investor confidence in Indian assets.