India’s foreign exchange reserves jumped by $10.5 billion to $692.87 billion in a week, marking the biggest weekly increase since January, driven by currency asset strength and gold revaluation amid global dollar weakness.
India’s foreign exchange reserves climbed by $10.51 billion to $692.87 billion in the week ended July 31, the Reserve Bank of India said, marking the sharpest weekly rise since January 30. The increase was driven mainly by a stronger position in foreign currency assets and a rise in gold holdings, extending a recent recovery in the country’s war chest after earlier declines linked to dollar sales to steady the rupee.
According to RBI data, foreign currency assets rose by $8.75 billion to $564.68 billion, while gold reserves increased by $1.69 billion to $104.74 billion. Market participants said the central bank bought about $4.1 billion during the week, with the rest of the increase in foreign currency assets largely reflecting valuation gains as the dollar weakened. Gold also benefited from revaluation. Gaura Sen Gupta, economist at IDFC First Bank, said the RBI’s net dollar purchases were about $4.1 billion and that the balance of the increase was mainly due to revaluation gains.
The figures also showed Special Drawing Rights rising by $48 million to $18.67 billion and India’s reserve position with the International Monetary Fund edging up by $28 million to $4.78 billion. RBI data indicated that total inflows through FCNR(B), ECB and OFCB stood at about $40.8 billion as of July 31, although market participants said only around half had yet been converted into actual dollar purchases by the central bank because some inflows were still working through the swap process and because the RBI had also been selling dollars in the spot market.
India’s reserves had previously reached a record $728.49 billion in the week ended February 27 before slipping as the RBI intervened to curb volatility in the rupee. More recently, the central bank has resumed dollar buying amid sustained foreign exchange inflows, helping to rebuild reserves. The latest reading leaves the stockpile comfortably above the recent low point and underscores how quickly valuation changes, central bank intervention and external inflows can shift the headline number.
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