Business chamber Assocham welcomed India's forex reserves reaching an all-time high of $740.80 billion as of August 28, saying the rise reflects a robust external sector and strengthening confidence in the Indian economy.
Key Highlights
- India's forex reserves hit a record $740.8 billion, rising for the ninth consecutive week, Assocham said.
- Current account deficit stayed steady at 0.5% of GDP in Q1 FY27, supported by strong services exports and remittances.
The forex reserves increased by $11.48 billion during the week, marking the ninth consecutive weekly rise. Foreign Currency Assets (FCA), the largest component of India's reserves, crossed the $600 billion milestone, rising by $9.34 billion over the previous week. Gold reserves, the second-largest component, stood at $116.41 billion.
Assocham Says Record Reserves Provide Strong Economic Cushion
Assocham President Nirmal K. Minda said the record accumulation of foreign exchange reserves provides a strong cushion against global economic uncertainties and external shocks. He added that a robust forex position will contribute to greater currency stability, strengthen macroeconomic resilience, support economic growth and enhance investor confidence.
Minda also noted that the strong reserve position improves India's capacity to manage external financing requirements, strengthens the country's global financial standing and enhances its international competitiveness. According to the industry body, this strong reserve position provides greater policy space to navigate volatility in global financial markets, commodity prices and capital flows.
RBI's Swap Facility Boosts Reserves, Strengthens Rupee Defence
An increase in India's forex reserves reflects strong economic fundamentals and gives the Reserve Bank of India (RBI) greater headroom to stabilise the rupee during periods of volatility. A robust forex kitty also enables the RBI to intervene in the spot and forward currency markets by releasing dollars when required to prevent a sharp fall in the rupee.
India's Current Account Deficit Remains Steady at 0.5% of GDP
Meanwhile, India's current account deficit (CAD) stood at $4.2 billion in the April-June quarter (Q1) of the current financial year, remaining steady at 0.5% of GDP despite rising global prices of oil, LPG and fertilisers due to the West Asia crisis, according to data released by the RBI on Tuesday. The CAD during the same quarter of the previous financial year was estimated at 0.4% of GDP.
Also Read: India's Forex Reserves Hit Record High on RBI Dollar Push
Services Exports and Remittances Drive Current Account Resilience
Net services receipts increased to $51.6 billion in Q1 of 2026-27, up from $47.9 billion in the first quarter of the previous financial year, driven by a year-on-year rise in services exports across major categories such as computer services, other business services and transportation services.
Personal transfer receipts, mainly representing remittances from Indians employed overseas, also increased to $42.9 billion during the first quarter, up from $33.2 billion in the same period of the previous year.
Foreign direct investment (FDI) recorded a net inflow of $6.1 billion in the first quarter, up from $5.2 billion in the same quarter last year.
