India’s foreign exchange reserves have reached a fresh record high and rose for the second consecutive week as major components of the country’s reserve assets were up.
According to RBI data released yesterday, India’s forex reserves increased by $12.42 billion to $729.33 billion in the last week of August.
The latest increase has taken the reserves above the previous record of $728.49 billion, which was set in the week ending February 27, 2026.
The new numbers also show how India’s external financial position is strong but global markets are still uncertain over interest rates, currency movements and economic growth.
Forex reserves increase for the second consecutive week
India's foreign exchange reserves had already increased significantly in the previous week.
For the week ending August 14, reserves had climbed by $9.90 billion to $716.91 billion. The additional $12.42 billion increase in the next week has taken reserves to a new peak.
The consecutive weekly gains show a significant improvement in India’s reserve status.
A strong foreign exchange reserve position insulates an economy from external economic shocks and allows a country to meet international payment obligations. It can also lend confidence in the domestic economy when the global financial markets are in a state of flux.
Foreign currency assets rise $9.48 billion
Foreign Currency Assets (FCA), which constitute the largest portion of India’s forex reserves, increased significantly during the week.
According to RBI data, FCA rose by $9.48 billion to $591.33 billion in the week ended August 21.
FCA includes assets denominated in major foreign currencies. While the US dollar is an important factor, the value of India's foreign currency assets also depends on moves in other currencies such as the euro, British pound and Japanese yen.
So, fluctuations in exchange rates influence the dollar value of India's foreign currency assets and thus the overall forex reserve figure.
Gold reserves also surge
India’s gold reserves also contributed greatly to the latest increase.
The value of the country's gold reserves rose by $2.80 billion to $114.22 billion during the week under review.
The increase comes at a time when gold is still very much the central bank’s reserve asset. Gold is diversified and can be viewed as a store of value during times of financial and geopolitical uncertainty that are very much in need of economic diversification.
The increase in gold reserves and foreign currency assets in India’s reserves was a major factor in enhancing India’s reserve position.
SDRs and IMF reserves increase
India also had increases in its Special Drawing Rights (SDRs) and reserve position with the International Monetary Fund.
The country’s SDR holdings increased by $112 million to $18.85 billion.
Meanwhile, India's reserve position with the IMF rose by $26 million to $4.92 billion.
Although these components are much smaller than foreign currency assets and gold reserves, their increases also contributed to the overall rise in India's forex reserves.
Measures to increase foreign currency inflows
The increase in reserves is also the result of measures by the central government and RBI to promote foreign currency inflows.
Among other measures were measures related to Foreign Currency Non-Resident (Bank) deposits or FCNR(B) deposits that were adopted to attract more foreign currency into the Indian financial system.
According to the information available, India has received foreign currency inflows of approximately $72 billion so far under concessional swap measures.
Such measures can boost the country’s external liquidity position and can provide more support to foreign exchange reserves.
Why do record forex reserves matter?
A high level of foreign exchange reserves is generally seen as positive for an economy like India.
Large reserves allow the country to meet international payment obligations, handle external shocks and react to the global currency and financial market volatility.
They can also help to put investors and international financial institutions in confidence about the country’s ability to manage external liabilities.
With reserves now standing at $729.33 billion, India has built a substantial buffer against potential global economic disruptions.
The latest RBI data therefore highlights not only the size of India's foreign exchange holdings but also the broader resilience of the country's external financial position.
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