India’s forex reserves crossed the $700 billion-mark for the first time, the fourth country to achieve this milestone. The reserves jumped $12.588 billion to $704.885 billion for the week ended September 27.
China, Japan and Switzerland are the other countries with forex reserves above $700 billion.
In India, reserves rose for seven consecutive weeks on account of foreign fund inflows in both debt and stocks.
Foreign portfolio investors (FPIs) have pumped $8.82 billion into stocks this calendar year, according to National Securities Deposit Limited (NSDL). In debt, it stands at $13.13 billion.
The rise of $12.588 billion for the September 27-week is the biggest weekly increase in more than a year. The overall kitty swelled 2.838 billion to $692.296 billion in the previous reporting week.
Analysts said valuation gains and dollar purchases by the Reserve Bank of India are the main reasons behind the spurt in reserves.
Foreign currency assets, a major component of forex reserves, increased $10.468 billion to $616.154 billion for the last reporting week, according to RBI data.
In dollar terms, the FCA change includes the fluctuations of other units such as the euro, pound and yen that are held by the central bank.
On the other hand, gold reserves increased $2.184 billion to $65.796 billion during the week. The Special Drawing Rights (SDRs) were up $8 million to $18.547 billion.
``The surging reserves have been facilitated by overseas inflows into India’s stocks and bonds. India’s forex reserves have been on an upswing since 2013, when it was a part of the ‘fragile five’ category and foreign investors exited because of weak macroeconomic fundamentals,” according to Manoranjan Sharma, chief economist at Infomerics Ratings.
“Since then, an effective check of the inflationary spiral, accelerated economic growth, squeezing of fiscal and current account deficits, and abiding faith in the India growth story have led to a surge of foreign funds.
“Foreign inflows hit $30 billion this year, led mainly by investments in local debt on inclusion in a key JP Morgan index,’’ he said.
“It is expected that India’s forex reserves will rise to $ 745 billion by March 2026. Such healthy reserves strengthen buffers against contingent external risks.”
