India's foreign exchange reserves surged by a record $44.903 billion during the week ended September 4, reaching a new lifetime high of $785.706 billion, according to the Reserve Bank of India’s weekly data. The latest increase marks the largest-ever weekly rise in the country’s foreign exchange reserves.

Key Highlights

• India foreign exchange reserves jumped $44.903 billion in one week to reach a record $785.706 billion.
• Foreign currency assets rose sharply, while gold reserves declined by $2.594 billion during the week.

The sharp rise came after the RBI introduced concessional foreign exchange swap initiatives, which encouraged banks to raise foreign currency deposits. The measures have helped generate significant forex inflows while supporting the country’s reserve position amid pressure on the rupee.

Foreign Currency Assets Drive Reserve Growth

Foreign currency assets (FCAs), the largest component of India’s forex reserves, increased by $47.498 billion to $648.168 billion during the reporting week. The movement in FCAs also reflects valuation changes in major currencies such as the euro, pound and yen against the US dollar.

The latest rise follows an increase of $11.475 billion in the previous reporting week, when total reserves had reached $740.803 billion.

RBI Forex Swap Measures Boost Inflows

The RBI’s concessional forex special swap facility, announced in June, have played a key role in reversing the decline in reserves. The initiatives allowed banks greater flexibility in pricing three- and five-year foreign currency deposits and offered favourable hedging arrangements.

According to the source data, the measures have resulted in more than $136 billion in new flows, contributing significantly to the recent increase in reserves.

The reserve accumulation comes after India’s forex kitty had declined following the onset of the Iran conflict in March, when pressure on the rupee prompted the RBI to intervene in the foreign exchange market through dollar sales.

Also Read: Banking Liquidity Surplus Hits Rs 9.71L Cr Driven by FCNR-B Inflows

Gold Reserves, SDRs and IMF Position

While foreign currency assets recorded a sharp increase, India’s gold reserves declined by $2.594 billion to $113.816 billion during the week.

The country’s special drawing rights (SDRs) fell by $4 million to $18.806 billion, while the reserve position with the International Monetary Fund increased by $2 million to $4.916 billion.

The latest India's forex reserves underline the impact of stronger foreign currency inflows and RBI measures on India’s external-sector buffers. The RBI’s reserve data are reported weekly, with foreign exchange reserves comprising foreign currency assets, gold, SDRs and the reserve tranche position.