India’s Forex Reserves Hit Record $740.8 Billion on Strong Foreign Currency Inflows

Mumbai— India’s foreign exchange reserves surged by $11.475 billion in the week ended August 28, reaching a record $740.803 billion, according to data released by the Reserve Bank of India (RBI) on Friday.

The latest increase lifted India’s reserves by $49.696 billion from the end of March and by $46.574 billion from the same period a year earlier, highlighting the country’s strengthening external financial position.

The increase was driven largely by a rise in foreign currency assets and gold holdings.

Foreign currency assets lead increase

Foreign currency assets (FCA), the largest component of India’s forex reserves, increased by $9.337 billion during the week to $600.67 billion.

FCA holdings were up $48.387 billion from end-March levels and $16.73 billion higher than a year earlier.

India’s gold reserves also recorded a substantial increase, rising by $2.191 billion during the week to $116.409 billion.

Gold holdings have increased by $1.014 billion since the end of March and were $29.641 billion higher than a year earlier, according to the RBI data.

IMF-related reserves

India’s Special Drawing Rights (SDRs) with the International Monetary Fund stood at $18.81 billion, down $43 million from the previous week. However, SDR holdings remained $188 million above their end-March level.

The country’s reserve position with the IMF declined by $11 million during the week to $4.914 billion. The position was nevertheless $106 million higher than at the end of March.

The record reserves provide India with a substantial cushion against external shocks, including volatility in global financial markets, currency movements and changes in capital flows.

Foreign currency inflows strengthen reserves

The strong reserve position has been supported by increased foreign currency inflows following measures introduced by the RBI earlier in June, including a special deposit programme aimed at Indians and other non-resident customers.

The RBI said earlier in September that India’s banking system had mobilised $136.38 billion in foreign currency inflows through the central bank’s special dollar-rupee swap facility.

As of August 31, FCNR(B) deposits accounted for $127.23 billion of the total inflows, while overseas foreign currency borrowings (OFCBs) contributed $5.26 billion and external commercial borrowings (ECBs) brought in another $3.89. (Source: IANS)