India Becomes World’s Fourth-Largest Forex Reserve Holder, Reserves Touch Record $785.7 Billion
Total Views |
New Delhi , September 14 : India has overtaken Russia to become the world’s fourth-largest holder of foreign exchange reserves, with its reserves rising to a record $785.7 billion, bringing the country closer to the $800-billion mark.
India’s foreign exchange reserves have witnessed a sharp rise in recent weeks. The reserves increased by nearly $44.9 billion in a single week, around $56 billion over two weeks, and approximately $120 billion over ten weeks.
With this increase, India’s reserve stock has moved ahead of Russia. China, Japan and Switzerland continue to hold larger foreign exchange reserves than India.
The rise in reserves has been supported by strong foreign-currency inflows, including Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits and foreign borrowings.
However, these inflows also create repayment obligations in the future. Therefore, the entire increase in reserves cannot be considered as newly earned wealth for the country.
The Reserve Bank of India (RBI) manages these foreign-currency resources by investing them in interest-bearing foreign assets. The returns from these investments can help offset the cost of mobilising foreign-currency funds while strengthening India's external financial position.
ALSO READ: Jharkhand HC Says Ex-Husband’s Refusal to Remarry After Halala Is Not a Cognizable Offence
Higher reserves can also strengthen investor confidence and provide the RBI with greater flexibility to respond to volatility in global financial markets.