India’s foreign exchange reserves experienced a significant rise of over $10.5 billion in the week ending July 31, driven by increased foreign currency assets and gold holdings, signalling a stabilising external buffer amid global volatility.
India’s foreign exchange reserves rose sharply in the week ended July 31, climbing by $10.512 billion to $692.866 billion, according to data released by the Reserve Bank of India on Friday. The increase put the stockpile close to its recent highs and underscored a recovery in the country’s external buffers after a period of volatility.
The latest build-up was driven chiefly by foreign currency assets, which increased by $8.75 billion to $564.68 billion. These assets are reported in dollar terms and reflect the impact of movements in the euro, pound and yen as well as other non-dollar holdings in the reserve portfolio.
Gold also added to the improvement, with the value of bullion holdings rising by $1.685 billion to $104.743 billion. Smaller gains were recorded in Special Drawing Rights, which rose by $48 million to $18.666 billion, and in India’s reserve position with the International Monetary Fund, which edged up by $28 million to $4.778 billion.
The Reserve Bank and the government have recently stepped up efforts to draw more foreign exchange inflows, including through measures tied to foreign currency non-resident bank deposits, or FCNR(B). Reports have said the country has received about $32 billion under those schemes so far. India’s reserves had touched an all-time peak of $728.494 billion in late February before geopolitical tensions in West Asia, pressure on the rupee and central bank dollar sales helped push the total lower in the following weeks. Reuters and other financial reports have also shown that India’s reserves have been prone to sharp swings over the past few years as the central bank has intervened to smooth currency volatility.
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