India’s Forex Reserves Cross $700 Billion Mark for the First Time

India’s Forex Reserves Cross $700 Billion Mark for the First Time

India's foreign exchange reserves have crossed the $700 billion milestone for the first time, reaching $704.88 billion as of September 27, according to data from the Reserve Bank of India (RBI). This represents a weekly jump of $12.58 billion.

Foreign currency assets (FCA), which include investments in securities, deposits with central banks and the BIS, stood at $616.15 billion, while gold reserves amounted to nearly $66 billion. Special Drawing Rights (SDRs) were valued at $18.5 billion, and India's reserve tranche position at the International Monetary Fund (IMF) stood at $4.38 billion.

Experts believe that the rising forex reserves will provide India with a buffer against global economic disruptions. Aditi Nayar, Chief Economist at ICRA, noted that the reserves offer insurance against potential geopolitical tensions affecting emerging markets. Sanjeev Agrawal, President of PHDCCI, emphasized that the record forex reserves boost India's standing in the global economic landscape amidst rising geopolitical vulnerabilities.

Foreign inflows have been bolstered by the strong monetary policy stance and government support, which has also attracted significant foreign investments. With the US Federal Reserve reducing its policy rate by 50 basis points, experts predict that India’s financial markets will benefit from higher forex inflows due to relatively higher returns.

In his August 2024 statement, RBI Governor Shaktikanta Das confirmed that India's external sector remains resilient, and the forex reserves would comfortably meet external financing needs.