India’s Forex Reserves Rise by $8.66 Billion to Reach Record $725.7 Billion

India’s foreign exchange reserves have reached a new peak, reflecting stronger external buffers and improving capital inflows. Latest data from the central bank shows a notable weekly increase driven by gains in foreign currency assets and gold reserves. 

The development comes amid changing global financial conditions, currency fluctuations and renewed investor confidence linked to recent trade developments.

Rise in Overall Reserve Holdings

India’s foreign exchange reserves increased by $8.66 billion during the week ending 13 February, reaching an all-time high of $725.7 billion.

The expansion strengthens the country’s ability to manage external shocks, stabilise currency markets and meet international payment obligations.

Foreign currency assets accounted for a significant portion of the increase, while higher gold reserves also contributed meaningfully to the overall rise. Special Drawing Rights recorded a modest addition during the same period.

Composition of the Reserve Increase

Data released by the central bank indicates that foreign currency assets grew by $3.55 billion, reflecting valuation changes and asset accumulation. Gold holdings rose by nearly $5 billion, highlighting continued diversification within reserve management strategies.

Such adjustments demonstrate an effort to balance liquidity, safety and long-term value preservation across reserve components.

Central Bank Market Operations

The central bank’s monthly bulletin showed active intervention in currency markets in recent months. During December, authorities purchased $18.33 billion while selling $28.35 billion, indicating net dollar sales aimed at managing exchange rate volatility.

In November, the bank had already conducted significant net sales in the foreign exchange market, reflecting efforts to stabilise the domestic currency amid global financial uncertainty.

Currency Movements and Investor Sentiment

Despite stronger reserves, the Indian rupee experienced fluctuations, weakening to 90.99 against the US dollar at the close of trading on Friday. Earlier depreciation pressures were linked to foreign portfolio outflows and uncertainty surrounding trade negotiations.

However, investor sentiment improved following progress in trade discussions involving India and major economic partners. Positive foreign portfolio flows in February supported a partial recovery of the rupee from its January lows.

External Factors Influencing Reserve Trends

Global monetary conditions, capital movements and geopolitical developments continue to shape reserve dynamics. Trade agreements and cross-border investment flows have played a role in restoring confidence among international investors.

Higher reserves also provide policymakers with flexibility to respond to sudden capital movements or exchange rate pressures in a volatile global environment.

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Conclusion

The record level of India’s foreign exchange reserves highlights improved external stability and renewed capital inflows. While currency markets remain sensitive to global developments, the strengthened reserve position offers a buffer against volatility and supports macroeconomic stability as India navigates evolving international financial conditions.

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