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New Delhi: India’s foreign exchange reserves have surged to a record $740.8 billion, driven by special economic incentives and a sharp increase in deposits from non-resident Indians (NRIs).
The Reserve Bank of India’s (RBI) latest data showed that the country’s foreign exchange reserves reached the new record in the week ending August 28.
The rise in reserves has also strengthened the Indian rupee against the US dollar.
According to RBI data, foreign currency assets rose to $600.67 billion in the final week of August, while the value of the country’s gold reserves increased to $116.41 billion.
India introduced a number of special financial facilities in June, including low-cost borrowing arrangements for state-owned entities and free hedging facilities for banks.
As a result, the RBI received more than $136 billion in foreign funds between June 5 and August 31, according to the figures cited in the report. Of the total inflows, around $127 billion came from deposits by non-resident Indians.
The large inflow of foreign funds has helped support the rupee, which strengthened by 0.3% against the US dollar during the week to reach 95.3775.
International financial institution HSBC said the increase in spot foreign exchange reserves would strengthen the RBI’s ability to stabilise the rupee during periods of market volatility.
The record reserve level is expected to provide India with a stronger financial buffer against external shocks while enhancing the central bank’s capacity to intervene in the currency market if necessary.