India’s forex reserves hit a record $729.3 billion, boosted by RBI swap schemes. Reserves now cover about 11 months of imports
Stronger reserves offer protection as West Asia tensions, high crude prices and capital outflows put pressure on the rupee and external balances
Reserves should not be used to artificially prop up the rupee. Some undervaluation can support exports, limit the current account deficit and attract investment
Swap-driven reserve gains provide short- to medium-term relief. They cannot substitute for stronger capital inflows and a sustainable external balance
Rising US bond yields, inflation and public debt could tighten global financial conditions, putting pressure on capital flows into emerging markets
India’s reserve cushion is reassuring, but policymakers must remain prepared for geopolitical shocks, tighter global finance and risks from leveraged AI investment