India's foreign exchange reserves reached an unprecedented $785.71 billion in the week concluding September 4, marking a substantial increase of $44.90 billion. Data released by the Reserve Bank of India (RBI) on Friday confirmed this new record, which builds upon an $11.47 billion rise observed in the preceding week, bringing reserves to $740.80 billion as of August 28.
This latest surge has propelled India’s overall reserves significantly above their levels at the start of the current financial year. Total reserves are now $94.599 billion higher than at the end of March and $87.438 billion up from a year earlier, according to RBI figures.
Components Driving the Record Increase
The primary catalyst for this record-breaking expansion was a robust increase in Foreign Currency Assets (FCA), which constitute the largest portion of India’s forex reserves.
Foreign Currency Assets (FCA)
- FCA surged by $47.498 billion during the week.
- Total FCA now stands at $648.17 billion.
- This component alone accounted for the majority of the overall weekly increase.
- FCA holdings are $95.886 billion higher than at the end of March.
- Compared to the same period last year, FCA has increased by $63.692 billion.
Gold Reserves See Decline
In contrast to the rising FCA, India's gold holdings experienced a decline during the same week.
- Gold reserves fell by $2.594 billion.
- The country’s gold holdings now stand at $113.816 billion.
- Despite this weekly dip, gold reserves remain $23.517 billion higher than a year ago.
- However, they are $1.580 billion lower than their level recorded at the end of March.
- Gold remains the second-largest component of India’s foreign exchange reserves, after foreign currency assets.
SDR Holdings and IMF Position
Other components of the reserves also saw minor fluctuations:
- India’s holdings of Special Drawing Rights (SDRs) with the International Monetary Fund (IMF) decreased marginally by $4 million, settling at $18.806 billion as of September 4. Despite this weekly decline, SDR holdings are $184 million higher than at the end of March and $64 million above their level a year earlier.
- Meanwhile, India’s reserve position with the IMF saw a slight increase of $2 million during the week, reaching $4.916 billion. This position is $108 million higher than at the end of March and has risen by $168 million from a year ago.
Overall, the latest data underscores a significant strengthening of India's external reserve position, driven primarily by foreign currency assets, despite minor adjustments in gold, SDR, and IMF holdings.