India’s forex reserves surge $12.58 bn to $704.89 bn in a week

India’s forex reserves surge $12.58 bn to $704.89 bn in week ended 27 September

Foreign exchange reserves of the country increased by $12.59 billion to $704.89 billion during the week ended 27 September 2024, the highest weekly rise in forex reserves since July 2023, the Reserve Bank of India (RBI) stated in its Weekly Statistical Supplement.

During the week, foreign currency assets with the RBI increased by $10.4 billion, taking the total to $616 billion. The value of forex reserves, may change in terms of the US dollar due to fluctuations in the value of other currencies such as the euro, pound, and yen that are part of the country’s forex reserves, RBI pointed out.

India’s gold reserves increased by $2 billion to $65.7 billion while the country’s holdings of Special Drawing Rights (SDRs) increased by a modest $8 million to $18.547 billion. India’s reserve position in the International Monetary Fund (IMF), however, decreased by $71 million to $4.3 billion during the week.

The rise in forex reserves of the country can be attributed in part to RBI’s purchase of dollar as also due to positive valuation adjustments.

With over $700 billion in forex reserves, India is the fourth largest holder of foreign exchange after China, Japan, and Switzerland.

Foreign currency inflows into the country reached approximately $30 billion, so far this year, primarily driven by investments in its equity and debt markets.

India's forex reserves increased by $87.6 billion this year, outpacing last year's total increase of nearly $62 billion.

Besides, RBI’s purchase of $4.8 billion, as also valuation gains of $7.8 billion due to declining US Treasury yields and rising gold prices have contributed to the spike in forex reserves.

While the value of the Indian rupee continues to remain at its lows of around 83 a dollar, forex reserves of the country are projected to grow further. Bank of America estimates India’s forex reserves to reach $745 billion by March 2026.