India’s foreign exchange reserves recorded a robust rise for the week ending June 28, 2025, climbing by $4.84 billion to reach $702.78 billion, according to the latest data released by the Reserve Bank of India (RBI). This marks one of the strongest weekly gains in the last two months, bringing the overall reserves just short of the record high of $705.1 billion achieved in October 2021.
Composition Of Forex Reserves (Latest)
| Component | Amount ($ billion) | Change ($ billion) |
|---|---|---|
| Foreign Currency Assets (FCA) | 654.33 | +4.18 |
| Gold Reserves | 55.79 | +0.54 |
| SDRs | 18.47 | +0.07 |
| Reserve Position In IMF | 4.19 | +0.05 |
| Total Reserves | 702.78 | +4.84 |
Key Factors Behind The Surge
- Strong capital inflows due to robust FPI equity and debt purchases amidst global risk-on sentiment.
- Steady rupee stability, with INR trading in a narrow 82.70-83.10 band against the USD, aided by RBI’s active forex management.
- Rising gold reserves, reflecting valuation gains in global gold prices and incremental purchases by the central bank.
- Healthy services exports, including IT, fintech, and consultancy sectors, bolstering current account dynamics.
Forex Reserves Trend: FY24-FY25
| Date | Forex Reserves ($ billion) |
|---|---|
| Mar 31, 2024 | 642.45 |
| Apr 26, 2024 | 650.98 |
| May 31, 2024 | 661.25 |
| Jun 7, 2024 | 667.87 |
| Jun 21, 2024 | 697.94 |
| Jun 28, 2024 | 702.78 |
The reserves have grown by over $60 billion in the past 12 months, driven by resilient macroeconomic fundamentals, surging FDI flows in manufacturing and renewable sectors, and the inclusion of Indian government bonds in global bond indices starting mid-2025.
Analyst Perspectives
- Suvodeep Rakshit, Kotak Institutional Equities:
“India’s reserves are comfortably above the IMF adequacy metric, covering nearly 11 months of imports, strengthening external sector resilience.” - Rahul Bajoria, Barclays India:
“The upcoming sovereign bond index inflows and consistent service exports surplus could push reserves to a new record by Q3 FY26.”
Global Context
| Country | Forex Reserves ($ billion) |
|---|---|
| China | 3,250 |
| Japan | 1,260 |
| Switzerland | 910 |
| India | 703 |
| Russia | 599 |
| Saudi Arabia | 452 |
| Hong Kong | 418 |
India remains the fourth-largest forex reserve holder globally, providing a robust cushion against external shocks, currency volatility, or global capital market disruptions.
Strategic Importance Of Rising Reserves
- Strengthens currency stability and provides confidence to foreign investors.
- Mitigates external vulnerabilities arising from global oil price swings or geopolitical risks.
- Enhances sovereign credit profile, supporting lower borrowing costs in global markets.
- Facilitates strategic interventions to curb rupee volatility during Fed rate hikes or global dollar rallies.
RBI’s Forex Management Strategy
The central bank continues to sterilise excess dollar inflows to prevent rupee over-appreciation while gradually building reserves to enhance its war chest. The RBI also diversifies reserve deployment into US Treasuries, high-grade sovereign bonds, and gold allocations, maintaining liquidity and returns.
Gold Reserves Rising
India’s gold reserves rose by $540 million to $55.79 billion, reflecting global price appreciation amidst geopolitical tensions and safe-haven demand. RBI’s gold holding strategy is aimed at diversifying reserves while ensuring long-term value preservation.
Future Outlook
| Drivers | Risks |
|---|---|
| – FPI debt inflows post JP Morgan and Bloomberg bond index inclusion | – Fed policy uncertainty and dollar strength |
| – Stable current account deficit within 1.2-1.5% of GDP | – Global oil price spikes |
| – Strong services exports momentum | – Geopolitical escalations (Middle East, Ukraine) |
| – Incremental FDI in manufacturing and RE | – China slowdown spillover effects |
Economists estimate that if capital flows remain robust and global oil prices remain below $90 per barrel, India’s forex reserves could surpass $720 billion by FY26, creating an all-time high and strengthening its macro buffer.
Government And RBI Statements
Finance Ministry officials lauded the reserve rise as a “reflection of India’s macroeconomic stability and global investor confidence” amidst an uncertain global growth backdrop.
RBI Governor Shaktikanta Das has reiterated that the central bank will “maintain two-sided market interventions to avoid excessive currency volatility while preserving reserve adequacy to manage external shocks.”
Conclusion
India’s forex reserves nearing the historic $705 billion mark is a testament to its economic resilience, strong external accounts, and robust capital flows. As global financial markets navigate US Fed policies, China’s slowdown, and geopolitical risks, India’s growing reserves provide a crucial macro stability cushion for sustainable growth, currency confidence, and investor trust.
Disclaimer: This news report is for informational purposes only and does not constitute investment, trading, or financial advice. Readers are advised to consult certified market professionals, forex strategists, and official RBI data releases before making any investment, trading, or business decisions based on this content. The publication is not responsible for any decisions taken based on the information presented.
