India's foreign exchange reserves hit new record high of $657 billion

India’s foreign exchange reserves rose by $5.16 billion to hit a new all-time high of $657.16 billion in the week ended July 5, latest data by the Reserve Bank of India showed. The total reserves rose on the back of an increase in foreign currency assets, which rose by $4.22 billion during the week.

The previous record high of $656 billion was hit in the week ended June 7.

Economists said that reserves rose due to a combination of revaluation and inflows. Forex reserves fell by $1.71 billion to $652 billion during the week ended June 28.

“The dollar weakened during the week and some flows came to the market, which could have contributed to the reserves,” said Madhavi Arora, lead economist, Emkay Global Financial Services.

Foreign portfolio investors infused Rs 8,484 crore in the debt market following the inclusion of Indian bonds in JP Morgan's Government Bond Index - Emerging Markets on June 28. On the other hand, domestic equities witnessed Rs 15,352 crore worth of inflows during the same period.

Last September, JP Morgan announced the inclusion of government papers issued by the Reserve Bank of India (RBI) under the fully accessible route in its widely tracked GBI-EM. The 10-month phased inclusion of the bonds, concluding by March 31, 2025, will incrementally increase Indian bonds’ weight by 1 per cent every month, reaching a 10 per cent weightage, similar to that of China.

Gold reserves rose by $904 million during the week, whereas SDRs increased by $21 million.