India’s foreign exchange (Forex) reserves have remained above $700 billion for the second consecutive week, according to data released by the Reserve Bank of India (RBI) on Friday. The Forex reserves stood at $701.18 billion as of October 4, reflecting a decrease of $3.71 billion from the previous week, as per the RBI’s weekly bulletin.
Despite the slight drop, the country’s Forex reserves of over $700 billion mark a significant milestone, representing an all-time high and positioning India as the fourth-largest holder of Forex reserves globally. This sustained high level of reserves highlights the country’s economic resilience and stability.
In the preceding seven weeks, India’s forex reserves witnessed an impressive increase of nearly $35 billion, driven by strong foreign inflows and a stable macroeconomic environment. According to the RBI’s Weekly Statistical Supplement, the Foreign Currency Assets (FCAs), which form a significant portion of the total reserves, dropped by $3.51 billion, bringing the total to $612.6 billion.
Additionally, gold reserves also saw a decrease, albeit modest, by $40 million, bringing the total to $65.76 billion. The International Monetary Fund (IMF) maintained Special Drawing Rights (SDRs) as a reserve currency, which saw a minor decline of $123 million, bringing the total to $18.43 billion. Meanwhile, India’s reserve position with the IMF experienced a marginal dip of $71 million, standing at $4.3 billion.
Despite the global geopolitical uncertainties, investor confidence in India’s growth trajectory remains robust. Last week, India’s forex reserves surged past the $700 billion mark for the first time, reaching an impressive $704.89 billion. This marked a significant rise of $12.59 billion in just one week, the largest weekly increase since mid-July 2023.
India’s remarkable Forex reserves have placed it alongside three other countries—China, Japan, and Switzerland—that have surpassed the $700 billion threshold. The robust inflow of foreign capital, which has crossed $30 billion this year, has contributed significantly to this achievement.
We expect India’s forex reserves to continue growing in the future, thereby bolstering the country’s economic growth prospects. A strong reserve position not only strengthens India’s standing in the international arena but also attracts foreign investments and promotes domestic trade and industry.
Experts in the industry emphasize that a robust foreign exchange position and sound monetary policies are fostering confidence in businesses and industries, which in turn is drawing in more foreign investment. Despite global geopolitical challenges, we expect India’s solid economic fundamentals and resilient Forex reserves to support sustained growth and stability in the coming years.
