India’s Forex Reserves: India’s foreign exchange reserves rose by $963 million to $672.59 billion.
In the week ended June 19, snapping the previous week’s steep decline, according to data released by the Reserve Bank of India (RBI) on Friday. The country’s forex kitty had dropped by $9.99 billion in the preceding week to $671.63 billion, making the latest increase a modest recovery.
Gold reserves drive overall increase
The rise in overall reserves came despite a decline in foreign currency assets (FCAs), the largest component of India’s forex reserves.
FCAs fell by $3.07 billion to $541.22 billion during the week. These assets are valued in US dollar terms and are affected by movements in major global currencies, including the euro, pound sterling and Japanese yen, against the dollar.
The fall in FCAs was more than offset by a sharp increase in gold reserves, which climbed $4.11 billion to $107.93 billion.
Meanwhile, Special Drawing Rights (SDRs) with the International Monetary Fund (IMF) declined by $52 million to $18.65 billion, while India’s reserve position with the IMF edged down $22 million to $4.79 billion.
Record foreign inflows into government bonds
The latest RBI data comes at a time when overseas investors are pouring money into India’s debt market.
Foreign portfolio investors (FPIs) have invested nearly Rs 40,000 crore in government securities so far in June, driven by recent RBI and government measures aimed at making the domestic bond market more attractive to global investors.
According to data cited by The Economic Times, FPIs bought Rs 39,640 crore worth of government bonds during the month, surpassing the previous monthly record of Rs 22,005 crore set in August 2024.
The strong inflows are expected to bolster India’s external position, support the rupee and provide additional stability to the country’s foreign exchange reserves going forward.
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