India’s foreign exchange reserves rose by $2.7 billion to reach $698.19 billion for the week ending July 25, according to data released by the Reserve Bank of India. The increase was primarily driven by a $1.31 billion rise in foreign currency assets, which now stand at $588.93 billion. These assets, expressed in dollar terms, reflect changes in the value of major currencies such as the euro, pound, and yen held in the reserves.
Gold reserves also contributed significantly, increasing by $1.2 billion to $85.7 billion. Special drawing rights with the International Monetary Fund rose by $126 million to $18.8 billion, while India’s reserve position with the IMF improved by $55 million to $4.75 billion during the same period.
The RBI continues to intervene in the foreign exchange market to manage liquidity and curb excessive volatility in the rupee’s exchange rate. These interventions are aimed at maintaining orderly market conditions rather than targeting specific exchange rate levels.
According to the RBI’s monthly bulletin released last month, gross foreign direct investment into India surged to $8.8 billion in April, up from $5.9 billion in March and $7.2 billion in April 2024. Nearly half of these inflows were directed toward the manufacturing and business services sectors. The bulletin also noted that India ranked 16th globally for FDI inflows and attracted $114 billion in greenfield investments in the digital economy between 2020 and 2024, the highest among countries in the Global South.
Foreign portfolio investment also showed strength, with net inflows of $1.7 billion in May, led by the equity market. This marked the third consecutive month of gains for equities, supported by positive global and domestic developments including the India-Pakistan ceasefire, the US-China trade truce, and stronger-than-expected corporate earnings for the fourth quarter of 2024–25. These factors boosted investor confidence and prompted portfolio shifts toward Indian assets.
