Mumbai: India’s foreign exchange reserves rose by $12.4 billion to an all-time high of $729.3 billion in the week ended August 21, strengthening the country’s external financial buffer.
Reserve Bank of India data placed the total at $729.33 billion. Foreign currency assets, the largest component, stood at $591.33 billion, while gold reserves were valued at $114.22 billion. Special Drawing Rights amounted to $18.85 billion and India’s reserve position in the International Monetary Fund was $4.92 billion.
The weekly rise was led by an increase of about $9.5 billion in foreign currency assets and about $2.8 billion in the value of gold holdings. Changes in foreign currency assets reflect not only dollar flows but also the movement of other major currencies held in the reserves when they are expressed in US dollars.
The latest figure surpassed the previous peak and continued the sharp reserve accumulation seen in recent weeks. The build-up has coincided with strong foreign-currency inflows mobilised through measures introduced by the central bank to support the balance of payments and add to the country’s reserve cushion.
A special dollar-rupee swap facility for Foreign Currency Non-Resident bank deposits, overseas foreign currency borrowings and external commercial borrowings mobilised about $73 billion by August 21. The largest share came through deposits raised from non-resident Indians, with smaller amounts contributed by other eligible borrowing routes.
Foreign exchange reserves give the central bank capacity to manage disorderly movements in the currency market and help meet external payment requirements. They are not a government spending fund, and their level can change because of market valuation, foreign-currency flows and intervention undertaken to maintain orderly market conditions.
A larger reserve stock can improve confidence in India’s ability to pay for essential imports and service external obligations during periods of global stress. It also provides a buffer against sudden changes in capital flows, commodity prices and international financial conditions. The adequacy of reserves is assessed alongside import cover, short-term external debt and other balance-of-payments indicators.
The composition of the latest total shows that foreign currency assets still account for most of the reserves. Gold has become a substantial second component, while Special Drawing Rights and the IMF reserve position form a smaller share. Valuation gains in gold can lift the headline total even without physical purchases during the reporting week.
The accumulation comes at a time when global currency markets remain sensitive to interest-rate expectations, energy prices and geopolitical risks. Such conditions can generate rapid shifts in portfolio and trade-related flows, making the availability of a substantial reserve buffer important for macroeconomic stability.
The record level does not remove external risks. A sustained rise in import costs, weaker exports or an abrupt reversal in capital flows could place pressure on the currency and the balance of payments. The central bank may also use part of the reserve stock when it intervenes in the market, causing weekly totals to fluctuate.
For now, the August 21 data mark a new high and show a sizeable weekly increase across the main reserve components. Future releases will indicate whether the recent inflow-led accumulation continues after the special mobilisation measures run their course.
