India’s Forex Reserves Hit Record $723.77 Billion

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India’s foreign exchange reserves (FOREX Reserves) surged by a robust $14.361 billion to reach an all-time high of $723.774 billion in the week ended January 30, reflecting strong external sector fundamentals. The latest data released by the Reserve Bank of India shows sustained momentum after a rise of $8.053 billion in the previous week, when reserves had crossed the earlier peak recorded in September 2024.

This sharp increase highlights India’s growing resilience against global financial volatility and external shocks.

Drivers Behind the Sharp Increase

The primary contributor to the latest jump was a significant rise in gold reserves, reflecting the central bank’s strategy of diversifying reserve assets.

Key Highlights:

Gold reserves rose by $14.595 billion
Total gold holdings reached $137.683 billion
Supported by rising global gold prices
Valuation gains boosted reserve levels

The sharp increase underlines India’s preference for gold as a safe-haven asset amid geopolitical tensions, inflationary pressures, and uncertainty in global financial markets.

Foreign Currency Assets See Marginal Dip

Foreign Currency Assets (FCAs), which form the largest component of India’s forex reserves, declined marginally during the reporting week.

FCA Status:

Decline: $493 million
Level: $562.392 billion

FCAs are affected by exchange rate movements of major non-US currencies such as the euro, pound sterling, and Japanese yen against the US dollar. Despite the weekly decline, FCAs remain at historically high levels, providing a strong cushion against balance of payments pressures.

SDRs, IMF Position, and Rupee Trends

Other components of India’s foreign exchange reserves also witnessed positive movement.

Key Developments:

Special Drawing Rights (SDRs) rose by $216 million to $18.953 billion
India’s reserve position with the International Monetary Fund increased by $44 million to $4.746 billion

During the same period, the India rupee recorded its strongest weekly gain in over three years, appreciating by 1.4 percent. However, it ended the week slightly weaker at ₹90.6550 per US dollar, mainly due to dollar outflows and global market pressures.

Significance of Rising Forex Reserves

India’s record-high forex reserves have important macroeconomic and strategic implications.

Economic Significance:

Strengthens external sector stability
Enhances investor confidence
Supports exchange rate management
Improves sovereign credit profile
Provides buffer against capital outflows

High reserves also enable the central bank to intervene effectively in currency markets and manage volatility during periods of global stress.

Impact on Economic Policy and Growth

Robust forex reserves support India’s broader economic objectives by:

Facilitating stable imports of crude oil and essential goods
Supporting external debt servicing
Encouraging foreign investment
Strengthening monetary policy transmission

They also reflect strong capital inflows, prudent macroeconomic management, and sustained export performance.

Conclusion

India’s record foreign exchange reserves of $723.77 billion mark a major milestone in strengthening macroeconomic stability and external resilience. Driven largely by a sharp rise in gold holdings and supported by healthy SDR and IMF positions, the surge highlights prudent reserve management by the RBI. Despite minor fluctuations in foreign currency assets and the rupee, India remains well-positioned to withstand global financial uncertainties and sustain long-term economic growth.