India’s foreign exchange reserves surged to an all-time high of $785.7 billion after recording their biggest-ever weekly increase.
Highlights
- India’s forex reserves jumped a record $44.903 billion in one week.
- Total reserves reached an all-time high of $785.706 billion as of September 4.
- India has overtaken Russia to become the world’s fourth-largest forex reserve holder.
- Foreign currency assets surged $47.498 billion to $648.168 billion.
- RBI’s special dollar mobilisation measures have attracted more than $136 billion.
India has become the world’s fourth-largest holder of foreign exchange reserves after its forex stockpile recorded its biggest-ever weekly increase, strengthening the country’s financial buffer at a time of heightened volatility in global markets.
Foreign exchange reserves surged by $44.903 billion during the week ended September 4 to reach an all-time high of $785.706 billion, according to the latest Reserve Bank of India data.
The record increase has pushed India past Russia in global forex reserve rankings. India now trails only China, Japan and Switzerland.
Foreign Currency Assets Drive Record Jump
Foreign currency assets, the largest component of India’s reserves, increased by $47.498 billion during the reporting week to $648.168 billion.
The increase was partly offset by a $2.594-billion decline in the value of gold reserves to $113.816 billion.
India’s Special Drawing Rights with the International Monetary Fund declined marginally by $4 million to $18.806 billion, while its reserve position with the IMF increased by $2 million to $4.916 billion.
RBI Measures Bring Massive Dollar Inflows
A major factor behind the reserve build-up has been the RBI’s dollar mobilisation programme introduced after pressure on the rupee earlier this year.
The central bank’s measures have attracted more than $136 billion through foreign-currency deposits and overseas borrowing channels. Foreign Currency Non-Resident Bank, or FCNR(B), deposits alone generated more than $127 billion in inflows.
Strong demand prompted the RBI to close the special FCNR(B) window on August 31, a month earlier than originally planned.
Reserves Rise for 10 Straight Weeks
The latest increase is part of a broader recovery in India’s external buffers.
Forex reserves have now increased for 10 consecutive weeks, adding nearly $120 billion during the period.
In the previous reporting week alone, reserves had risen by $11.475 billion to $740.803 billion.
The rapid accumulation comes after reserves faced pressure earlier in the year as geopolitical tensions in West Asia, elevated crude oil prices and a weaker rupee prompted RBI intervention in the currency market.
Why $785 Billion Forex Reserves Matter
A larger reserve stockpile gives the RBI greater capacity to intervene in foreign exchange markets during periods of sharp currency volatility.
It also provides India with a bigger financial cushion against external shocks, including volatile capital flows, higher oil import costs and disruptions in global financial markets.
However, the massive foreign-currency inflows also add rupee liquidity to the domestic banking system, requiring the RBI to manage excess liquidity through its monetary operations.
With reserves now at a record $785.7 billion and India moving into fourth place globally, the latest surge marks a significant strengthening of the country’s external financial position.
