India’s Forex Reserves Reach $684.8 Billion, Gold Reserves Increase

In the week ending October 25, India’s foreign exchange reserves fell by $3.46 billion, bringing the total to $684.8 billion, as reported by the Reserve Bank of India (RBI) amid ongoing selling pressure in the stock market by foreign institutional investors (FIIs) and rising geopolitical tensions.

Despite the overall decline in forex reserves, gold reserves—part of the total—rose by $1.08 billion to reach $68.53 billion. This increase in gold holdings comes as demand for the precious metal surges, driven by geopolitical uncertainties. Industry experts note that gold is increasingly viewed as a hedge against U.S. economic sanctions, maintaining its reputation as a safe-haven asset and a shield against inflation.

Although inflation has moderated, gold prices have soared to new highs, with the proportion of gold in India’s forex reserves climbing over 210 percent since 2018.

India’s forex reserves hit a record high of $704.885 billion at the end of September, positioning the country fourth globally—behind China, Japan, and Switzerland—in terms of reserve size. For the current financial year, India’s forex reserves have increased by $38.39 billion, sufficient to cover imports for approximately 11.2 months based on the balance of payments, according to the RBI.

This robust reserve level reflects the country’s strong macroeconomic fundamentals. Looking ahead, forecasts suggest that India’s forex reserves will continue to grow, which could enhance economic growth by attracting foreign investments and fostering domestic trade and industry. Changes in foreign currency assets are driven by the central bank’s market interventions and fluctuations in the value of foreign assets within the reserves. Experts expect bullion prices to remain strong this week, supported by safe-haven demand, ETF purchases, uncertainty surrounding the U.S. election, and growing expectations for aggressive rate cuts from global central banks.