India’s forex reserves top $700 billion for first time after seven-week surge

India’s forex reserves for the first time crossed the $700 billion mark, making it the fourth country to reach the mark. The Reserve Bank of India said that the reserves grew by $12.588 billion to stand at $704.885 billion for the week ended September 27.

India is now among a few nations, including China, Japan, and Switzerland, that have forex reserves of more than $700 billion. The last increase was the biggest in over a year since it had increased to $692.296 billion the previous week through an advance increment of $2.838 billion.

Analysts say the RBI has seen an increase in analysts due to valuation gains and heavy dollar purchases. The forex reserves, the main body of foreign currency assets, have risen to $616.154 billion during the same reporting period by $10.468 billion. This increase is not only because of direct valuation gains in the dollar holdings but also in other currencies, such as the euro, the pound, and the yen, that are part of the accounts of the central bank.

Gold reserves increased by $2.184 billion to reach $65.796 billion, while Special Drawing Rights stood at $18.547 billion, a small increase of $8 million.

The rising forex reserves have gotten a boost from strong overseas inflows into Indian stocks and bonds, Chief Economist at Infomerics Ratings Manoranjan Sharma feels. “Since 2013, when India was identified as part of the ‘fragile five,’ the nation has seen a dramatic turnaround. Effective management of inflation, accelerated economic growth, and a commitment to reducing fiscal and current account deficits have instilled confidence among foreign investors,” he added.

He also said that foreign inflows touched $30 billion this year, which has mainly been driven by investments in local debt after India’s induction into a JP Morgan index. Forward-looking, he estimated that India’s forex reserves could touch $745 billion in March 2026, which would further add to buffers of the country against possible external threats.

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