In a first, India's foreign exchange reserves surge past $700 billion

Reserves rose by $12.58 billion, marking the fifth-highest weekly increase

India’s foreign exchange reserves jumped by $12.6 billion to cross $700 billion for the first time after reporting a steady climb for seven straight weeks, according to the Reserve Bank (RBI).

The overall kitty swelled by $2.838 billion to touch $692.296 billion during the previous week.

India is only the fourth economy in the world to cross $700 billion in reserves after China, Japan, and Switzerland. Foreign currency assets increased by $10.46 billion during the period due to revaluation gains and spot market dollar purchases by the RBI. Gold reserves increased by $2.18 billion on September 20.

“Reserves rose because of revaluation gains, which were around $4.8 billion, and the rest was spot market purchases (dollars) by the RBI,” said Gaurav Sengupta, economist, IDFC First Bank.

“However, in the current week (ending October 4), there may be a smaller amount of foreign inflows due to geopolitical risks, and the RBI may have been selling dollars in the spot market to defend the rupee, so the increase won’t be as large,” she said.

Sengupta added that revaluation losses could also occur because US treasury yields are rising.