India has scripted history with its foreign exchange reserves hitting an unprecedented $725.727 billion in the latest weekly data from the RBI, a staggering $8.663 billion increase. Announced Friday, the figures reverse a $6.711 billion drop from the preceding week triggered by gold price volatility.
Breaking down the components: Gold reserves vaulted $4.990 billion higher to $128.466 billion. The dominant foreign currency assets rose $3.550 billion to $573.603 billion, valued in dollars alongside euros, pounds, and yen. SDRs added $103 million to reach $18.924 billion, with reserve positions up $19 million at $4.734 billion.
At its core, forex reserves are a barometer of economic health. They empower the RBI to intervene decisively when the rupee depreciates under dollar strength, injecting liquidity to stabilize markets. This prevents imported inflation from eroding purchasing power and supports orderly capital flows.
The surge signals booming foreign exchange earnings, driven by merchandise and services exports, alongside steady NRI remittances. It enhances India’s balance of payments, lowers external debt servicing risks, and boosts sovereign credit ratings. In a world of rising protectionism and energy transitions, such buffers are invaluable.
Experts attribute the growth to strategic RBI management and favorable trade winds. With reserves now surpassing many G20 peers, India is primed for ambitious infrastructure spends and green initiatives, all while maintaining macroeconomic guardrails.