Record Alert? India’s Forex Reserves Soar to $702.78 Billion, Near All-Time High!”

India’s foreign exchange reserves jumped sharply by $4.84 billion to reach $702.78 billion in the week ended June 27, the Reserve Bank of India (RBI) reported on Friday, July 4. The latest surge puts the country’s reserves just below their historic all-time peak of $704.89 billion recorded in September 2024, signaling strong macroeconomic stability amid global uncertainty.

In the previous week, the country’s reserves had declined by $1.01 billion to $697.93 billion, making this week’s rebound even more significant. The RBI’s latest data shows India’s foreign exchange buffers remain robust, giving the central bank flexibility to defend the rupee and manage external shocks such as oil price volatility, capital outflows, or global geopolitical tensions.

Foreign currency assets (FCA), the largest component of the reserves, reflect valuation changes from movements in major non-US currencies like the euro, pound sterling, and yen. The RBI did not specify the exact FCA contribution this week, but its steady accumulation underlines India’s cautious approach to reserve management.

However, the data also revealed some divergences within the reserve composition. Gold reserves fell by $1.23 billion during the reported week, settling at $84.5 billion. Analysts attribute this drop to changes in global gold prices and potential rebalancing by the RBI.

Meanwhile, India’s special drawing rights (SDRs) with the International Monetary Fund (IMF) rose by $158 million to $18.83 billion, reflecting incremental strengthening of the country’s global liquidity position. Additionally, India’s reserve position with the IMF increased by $176 million to $4.62 billion, underscoring improved financial stability and creditworthiness.

Economists say maintaining near-record reserves will help India weather external shocks, stabilize the rupee, and boost investor confidence, particularly as the global economic outlook remains uncertain. 

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