The historic high comes as India’s forex reserves jumped by $2.8 billion to $692.3 for the week ending September 20.
According to the Weekly Statistical Supplement released by the RBI, Foreign currency assets (FCAs) were up by $10.4 billion to $616 billion. Expressed in dollar terms, the FCAs include the effect of appreciation or depreciation of non-US units like the euro, pound and yen held in the foreign exchange reserves.
Gold reserves saw a surge of $2 billion to $65.7 billion. Meanwhile, SDRs for the above-mentioned week saw a marginal rise by $8 million to stand at $18.547 billion. Reserve position in the IMF dipped by $71 million to $4.3 billion.
India’s foreign-exchange reserves will likely rise to $745 billion by March 2026, giving the RBI more potential firepower to influence the rupee, according to Bank of America. The monetary authority “seems relaxed about holding larger forex reserves, owing to its desire to build buffers against contingent external risks,” reported Bloomberg quoting BofA analysts Rahul Bajoria and Abhay Gupta. India’s reserves adequacy appears strong compared with other major emerging markets, but not necessarily excessive, they said.
The amount provides stability to the rupee against external shocks, with the RBI using its reserves to limit extreme swings in the currency hovering near a record low.The RBI, from time to time, intervenes in the market through liquidity management, including through the selling of dollars, with a view to preventing a steep depreciation in the rupee.
The RBI closely monitors the foreign exchange markets and intervenes only to maintain orderly market conditions by containing excessive volatility in the exchange rate, without reference to any pre-determined target level or band.