India’s forex reserves surge $11.48 billion to record high of $740.8 billion
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India’s foreign exchange reserves rose by $11.475 billion to a fresh all-time high of $740.803 billion in the week ended August 28, according to data released by the Reserve Bank of India (RBI) on Friday. The latest increase marks the ninth consecutive weekly rise in the country’s forex kitty and comes amid efforts to strengthen foreign exchange liquidity and support the rupee.
In the previous reporting week, reserves had increased by $12.422 billion to $729.328 billion, which was then a record high. The latest reading has surpassed the earlier peak of $728.494 billion recorded in the week ended February 27, before the escalation of tensions in the Middle East triggered pressure on the rupee and prompted RBI intervention in the foreign exchange market.
The build-up in reserves has also been supported by the RBI’s concessional foreign exchange swap initiatives announced in June amid a sharp depreciation in the domestic currency. The measures have resulted in more than $132 billion in new flows.
Foreign currency assets (FCAs), the largest component of India’s reserves, increased by $9.337 billion during the week to $600.67 billion. FCAs also reflect the impact of appreciation or depreciation in major non-US currencies such as the euro, pound and yen held as part of the reserves.
Gold reserves, the second-largest component, rose by $2.191 billion to $116.409 billion. Meanwhile, special drawing rights (SDRs) declined by $43 million to $18.81 billion, while India’s reserve position with the International Monetary Fund (IMF) fell by $11 million to $4.914 billion.
The record reserve accumulation has drawn a positive response from industry body ASSOCHAM, which said the higher forex cushion would strengthen India’s ability to withstand external shocks and navigate global market volatility.
ASSOCHAM President Nirmal K Minda said, “The record accumulation of foreign exchange reserves provides a strong cushion against global economic uncertainties and external shocks.”
A robust forex position will contribute to greater currency stability, strengthen macroeconomic resilience, support economic growth and enhance investor confidence. The strong reserve position also improves India’s capacity to manage external financing requirements, strengthens the country’s global financial standing and enhances its international competitiveness,” he said
The industry body said the reserves also provide “greater policy space to navigate volatility in global financial markets, commodity prices and capital flows.”