India’s foreign exchange reserves surged to an all-time high of ₹65.24 lakh crore, underscoring the Reserve Bank of India’s expanding financial buffer at a time of global market uncertainty, currency volatility and shifting capital flows. The latest data show a sharp week-on-week rise driven by valuation gains in gold holdings and active liquidity management by the central bank.
According to figures released by the Reserve Bank of India, the country’s forex reserves rose from ₹63.73 lakh crore a week earlier, marking an increase of nearly ₹1.50 lakh crore. In dollar terms, reserves stood at USD 709.41 billion, surpassing the previous peak recorded in September 2024.
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The jump reflects a combination of factors, including higher global gold prices and the RBI’s use of forex swap operations to inject rupee liquidity into the domestic financial system. Analysts say the rise enhances the central bank’s capacity to manage external shocks and smooth volatility in the currency market.
A detailed breakdown of the reserves shows foreign currency assets — the largest component — at ₹51.76 lakh crore, while gold holdings were valued at ₹11.32 lakh crore. Special Drawing Rights (SDRs) stood at ₹1.72 lakh crore, and India’s reserve position with the International Monetary Fund was pegged at ₹43,086 crore.
The recent rise in gold valuation has played a significant role in lifting overall reserves. Global gold prices have rallied sharply amid heightened geopolitical tensions, slowing global growth and expectations of looser monetary conditions in major economies. Market data indicate that gold is on track for its strongest monthly gain in decades, providing a valuation boost to central bank holdings worldwide.
At the same time, the RBI has been actively deploying forex swaps to address tight liquidity conditions in the banking system. Through these operations, the central bank sells dollars forward while injecting rupees into the system, helping stabilise short-term funding rates without permanently drawing down reserves.
Economists say the dual effect of valuation gains and policy operations has provided the RBI with additional room to manoeuvre at a time when the rupee has underperformed several emerging-market peers. The domestic currency has faced pressure this year amid foreign portfolio outflows from equity markets and uncertainty surrounding global trade dynamics.
A higher reserve buffer strengthens the RBI’s ability to shield the rupee from speculative pressure and disorderly movements, particularly during periods of global risk aversion. It also provides confidence to international investors and rating agencies about India’s external sector resilience.
However, analysts caution that reserve accumulation going forward will depend on evolving global conditions and domestic currency pressures. The RBI’s forward dollar book — which reflects future dollar obligations arising from swap operations — will also be a key factor in determining the trajectory of headline reserves in coming months.
Market participants note that while valuation gains are supportive, sustained increases in reserves typically require stable capital inflows, a manageable current account balance and favourable global financial conditions. Any sharp reversal in gold prices or escalation in global risk could temper further gains.
The record reserve level comes ahead of critical macroeconomic events, including the Union Budget and ongoing assessments of global monetary policy trends. With several major central banks signalling a possible shift towards easing later this year, emerging markets like India are closely watching capital flow patterns and currency movements.
For now, the milestone underscores the RBI’s cautious approach to reserve management — prioritising stability over headline optics. Officials have repeatedly stressed that reserves are not a target in themselves but a tool to ensure orderly market conditions and macroeconomic stability.
As global uncertainty persists, India’s expanded forex war chest is expected to remain a key pillar supporting the economy’s external position and insulating it from abrupt shocks in global financial markets.
About the author – Ayesha Aayat is a law student and contributor covering cybercrime, online frauds, and digital safety concerns. Her writing aims to raise awareness about evolving cyber threats and legal responses.
