India's foreign exchange reserves hit record high of $709 billion

Reserves rise to a fresh peak after 17 months, aided by higher gold prices and revaluation gains, even as the rupee remains under pressure amid FPI outflows

India’s foreign exchange (forex) reserves rose to a record high of $709.41 billion in the week ended January 23, latest data from the Reserve Bank of India (RBI) showed. The total reserves increased by $8 billion during the week on the back of a rise in gold reserves and foreign currency assets.

 

It took nearly 17 months for forex reserves to scale to a new peak as the previous high of $705 billion was hit in the week ended September 27, 2024. The central bank has aggressively intervened in the forex market in the past one and a half years as the rupee has come under pressure due to global factors.

 

 

In the previous reporting week, the reserves had increased by $14 billion to $701 billion on the back of a $10 billion buy/sell swap the central bank conducted during the week.

 

Gold reserves increased by $5.64 billion to $123 billion in the reported week. Gold prices increased by 8.52 per cent to $4,987/ounce (oz) during the reported week.

 

Experts said that reserves rose on the back of a revaluation gain due to rise in gold prices and fall in dollar index during the week.

 

“The revaluation gain was of around $12.3 billion and net sale of dollars was around $3.4 billion during the week,” said Gaura Sen Gupta, chief economist, IDFC FIRST Bank. “The revaluation gain was because of the rise in gold prices and weakness in the dollar,” she added.

 

Dollar index fell to 98.37 on January 23, against 99.29 on January 16. It measures the strength of the greenback against a basket of six major currencies.

 

Expressed in dollar terms, foreign currency assets reflect the impact of appreciation or depreciation in non-US currencies, such as the euro, pound sterling, and yen, held as part of foreign exchange reserves.

 

“The revaluation gain was there due to rise in gold prices and there could be some actual gold buying,” said Madan Sabnavis, chief economist at Bank of Baroda.

 

During the reported week, special drawing rights (SDRs) were up by $33 million to $18.7 billion. India’s reserve position with the International Monetary Fund (IMF) was also up by $18 million to $4.7 billion during the same period.

 

In the current financial year so far, India’s foreign exchange reserves have increased by $44 billion.

 

India’s forex reserves remain comfortable, providing cover for more than 11 months of goods imports. The reserves can also provide cover for around 92 per cent of the external debt outstanding. The high level of reserves also provides firepower to the central bank to act against any volatility of the exchange rate. The rupee has come under pressure in the last one and a half years due to sustained foreign portfolio outflows amid trade tensions with the US. The rupee was the worst-performing Asian currency in 2025, and in January also, the Indian unit depreciated 2.26 per cent to touch a new closing low of 91.99 per dollar on Friday.