India's foreign exchange reserves have soared to a record high, reaching $693.32 billion for the week ending December 19, according to the Reserve Bank of India (RBI). This represents a significant increase of $4.36 billion from the previous week's $688.94 billion. The surge reflects a robust economic standing and the central bank's effective management of liquidity and stability in the foreign exchange market. The RBI actively monitors forex market developments and intervenes when necessary to ensure orderly trading conditions, without targeting a specific exchange rate.
The increase in reserves is primarily attributed to a substantial rise in foreign currency assets (FCA) and gold reserves. FCA, the largest component of the reserves, increased by $1.641 billion to $559.428 billion. These assets are held in various global currencies, and their value in dollar terms fluctuates with exchange rates between the euro, pound, yen, and the US dollar.
India's gold reserves experienced a significant boost, increasing by $2.623 billion to $110.365 billion. This substantial increase in gold holdings provides an additional layer of security and stability to the nation's financial reserves. As of the third quarter of 2025, India's gold reserves amounted to 880.18 tonnes. The central bank's gold holdings stand at a record 880.2 tonnes, with gold's share in India's foreign exchange reserves rising from 10% to 15.6% year-over-year.
Special Drawing Rights (SDRs) also contributed to the growth, rising by $8 million to $18.744 billion. Furthermore, India's reserve position with the International Monetary Fund (IMF) increased by $95 million to $4.782 billion.
The steady rise in foreign exchange reserves occurs amidst strong capital inflows into the country. Total FDI inflows in the first half of FY2025-26 stood at $50.36 billion, marking a 16% increase compared to the same period last year and the highest ever for the first half of any financial year. Gross FDI inflows have grown significantly over the years, rising from over $34 billion in 2012-13 to more than $80 billion in 2024-25. The latest jump in reserves was largely driven by the RBI's USD/INR buy-sell swap auction worth $5 billion, conducted on December 16 to inject liquidity into the banking system.
The increase in forex reserves is a positive sign for the Indian economy, indicating its resilience and stability in the face of global economic uncertainties.
