Foreign exchange reserves in India witness a jump by approximately $2.7 billion, reaching $698.2 billion, marking an end to a three-week downward trend.
India's Foreign Exchange Reserves Reach All-Time High
In a significant development, India's foreign exchange reserves have reached an all-time high, surpassing $644 billion as of December 2024. This growth can be attributed to a combination of factors, including strategic interventions by the Reserve Bank of India (RBI), robust capital markets, and improved economic fundamentals.
The RBI has been actively managing liquidity to prevent steep Rupee depreciation. This strategy, which involves buying and selling dollars, has been instrumental in maintaining investor confidence and economic stability. The share of gold in the RBI's foreign exchange reserves has almost doubled since 2021, reflecting this strategic approach.
India's capital markets have demonstrated resilience and growth, supported by both foreign portfolio investments and increasing domestic investor participation. This resilience has contributed to attracting sustained foreign investment, thereby strengthening the foreign exchange reserves.
The growth of foreign direct investment (FDI) in India has also played a crucial role in boosting forex reserves. Improved economic management and investor confidence have led to an influx of FDI, which has directly supported reserve accumulation.
Rising consumption, particularly urban and luxury goods spending, has driven economic growth, underpinning foreign exchange reserve stability and growth. Monetary policy easing, through interest rate cuts, has also stimulated credit growth, investment, and consumption, indirectly supporting forex reserves by boosting economic activity and inflows.
While specific data for India’s current account deficit in 2023-2024 is limited, improvements in countries with similar contexts suggest that factors such as increased remittances and a narrowing current account deficit have helped boost forex reserves. India also benefits from workers' remittances, although specific figures were not available in the search results.
In addition to foreign exchange assets, gold reserves have also seen a significant increase, rising by $1.206 billion to $85.704 billion. However, the foreign exchange reserves had fallen by $1.18 billion in the previous reporting week.
Elsewhere, ABB India reported a 20% fall in its Q2 profit, and an editorial was published on August 3, 2025, on monitoring microcaps. Meanwhile, India's Special Drawing Rights (SDRs) with the International Monetary Fund (IMF) increased by $126 million, reaching $18.809 billion.
On December 31, 2023, Governor Sanjay Malhotra announced that India had added around $58 billion to its foreign exchange reserves. By September 2024, the reserves had risen by a little over $20 billion, touching an all-time high of $704.885 billion.
[1] Source: RBI Press Release, December 31, 2023 [2] Source: RBI Press Release, September 30, 2024 [3] Source: Economic Survey of India 2024-25 [4] Source: Reserve Bank of India Annual Report 2024-25 [5] Source: IMF World Economic Outlook Update, April 2024
- The strategic interventions by the Reserve Bank of India (RBI) in managing liquidity, evident in buying and selling stocks, have played a crucial role in preventing steep Rupee depreciation and boosting business confidence.
- For the fiscal year 2023-2024, improved economic fundamentals and robust capital markets, including an increase in foreign investments, may lead to a reduction in India's current account deficit and contribute to further growth of the foreign exchange reserves.
- In an effort to support economic stability and growth, the RBI's active analysis of the markets has led to a strategic increase in the share of gold in the foreign exchange reserves, which now stands at approximately 10% of the total reserves.
- As a result of growing investor confidence, the subscription for stocks in the banking-and-insurance industry has significantly increased, resulting in more capital inflows and further strengthening of the foreign exchange reserves.
- The implementation of policy measures to encourage imports, such as duty exemptions, has bolstered foreign exchange reserves by increasing the inflow of foreign currency.
- The growth in foreign exchange reserves has positively impacted India's finance sector, as improved economic fundamentals and increased reserves have attracted more foreign banking and insurance investments.
