India's foreign exchange reserves surged by $4.885 billion to an all-time high of $728.494 billion in the week ended February 27.
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MUMBAI — India's foreign exchange reserves surged by $4.885 billion to an all-time high of $728.494 billion in the week ended February 27, data released by the Reserve Bank of India (RBI) showed on Friday.
The previous all-time high for the country’s foreign exchange kitty was $725.727 billion, which was seen in mid-February.
Foreign currency assets, a major component of the reserves, stood at $573.125 billion during the week. Expressed in dollar terms, the foreign currency assets include the effect of appreciation or depreciation of non-US units like the euro, pound, and yen held in the foreign exchange reserves.
The gold component of the foreign exchange reserves increased by over $4.141 billion to $131.63 billion for the week ended Feb 27.
Central banks worldwide have accumulated substantial amounts of gold as a safe-haven asset in their foreign exchange reserves amid uncertainty created by geopolitical tensions. The share of gold maintained by the Reserve Bank of India (RBI) as part of its foreign exchange reserves has almost doubled since 2021.
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The RBI has added approximately 75 tonnes to its gold reserves since 2024, bringing its total holdings to 880 tonnes, which now constitute about 14 per cent of India’s total foreign exchange reserves, according to a Morgan Stanley report.
The special drawing rights component in the forex kitty stood at $18.866 billion, which is a $26 million increase over the previous week.
An increase in the country’s foreign exchange kitty gives the RBI more headroom to strengthen the rupee vis-a-vis the US dollar. Adequate forex reserves enable the RBI to intervene in the spot and forward currency markets by releasing more dollars to prevent the rupee from going into a free fall and curbing its volatility.
Meanwhile, India’s current account deficit (CAD) stood at $13.2 billion, or 1.3 per cent of GDP, in the third quarter (October–December) of the financial year 2025–26, according to the RBI’s preliminary data on the balance of payments released earlier this week.
The deficit stood at $11.3 billion, or 1.1 per cent of GDP, in the corresponding quarter of the previous financial year.
The merchandise trade deficit increased to $93.6 billion in Q3FY26 from $79.3 billion a year earlier. However, there was a robust increase in services exports and remittances sent back home by Indians working overseas during the quarter.
Net services receipts rose to $57.5 billion in Q3FY26 from $51.2 billion in Q3FY25. The RBI stated that services exports increased on a year-on-year basis in major categories such as computer services and other business services.
Remittances by Indians employed overseas shot up to $36.9 billion from $35.1 billion a year earlier.