India’s foreign reserves surpassed $700 billion for the first time, rising by $12.6 billion during the week ending September 27, according to Reserve Bank of India (RBI) figures. India becomes the fourth economy in the world to reach $700 billion in foreign reserves, following China, Japan, and Switzerland. The $12.6 billion boost is the highest weekly addition since July 14, 2023. In comparison, the total reserves increased by $2.8 billion to $692.3 billion in the preceding reporting week. Stable oil prices & country’s stocks flows and bonds have increased foreign exchange reserves to $705 billion.
India’s reserves first reached $100 billion in December 2003, and it took more than three years to add the next $100 billion. However, the third $100 billion (from $200 billion to $300 billion) was reached in less than a year, with reserves exceeding $300 billion on February 29, 2008. According to Bloomberg data, the fastest increase was from $200 billion to $300 billion, which occurred in roughly 10 months, while the rise from $300 billion to $400 billion took more than nine years. The increase in reserves has been noteworthy, particularly under the current RBI governor. According to BofA Securities, India’s foreign reserves have expanded at the quickest rate under Governor Shaktikanta Das, ballooning by $4.2 billion per month over a protracted period.
In general, the RBI intervenes in the foreign exchange market to keep the currency stable. To reduce heightened rupee volatility, the central bank frequently buys and sells currency in the market. However, bigger foreign reserves do not always imply a stronger rupee; the local currency ended Friday’s session around a record low of 83.98 against the US dollar.
