India’s foreign exchange reserves climbed to $729.33 billion as of August 17, 2024, up from $716.91 billion in the previous week, according to Reserve Bank of India (RBI) data. The weekly increase of $12.42 billion was driven primarily by a sharp appreciation in gold holdings and foreign currency assets (FCAs). Gold reserves rose by approximately $3.3 billion, while FCAs increased by around $8.7 billion, supported by favorable global gold prices and a stable rupee that allowed the central bank to accumulate reserves without aggressive intervention.
The RBI’s regular market operations, including dollar purchases to manage liquidity, also contributed to the buildup. Special Drawing Rights (SDRs) and the country’s reserve position in the International Monetary Fund (IMF) saw only minor increases. The current level is the highest since late July 2024, when reserves briefly touched $731.5 billion before dipping. India’s reserves have recovered strongly from a low of $524.5 billion in October 2022 and now rank among the top five globally, behind China, Japan, and Switzerland.
Meanwhile, DBS analysts expect India’s upcoming GDP data to show economic resilience, which could support the Indian rupee. The bank cites strong domestic demand, government infrastructure spending, a resilient services sector, and steady manufacturing output as key drivers. A healthier growth outlook typically attracts foreign investment and supports the currency, though DBS cautions that global factors such as US monetary policy and oil prices could offset gains. If the GDP print confirms resilience, foreign portfolio investors may increase exposure to Indian assets, potentially boosting the rupee.
