India has become the fourth country in the world, after China, Switzerland, and Japan, with a foreign exchange (forex) reserve of more than $700 billion. The Indian foreign exchange has been increasing for the past seven consecutive weeks due to valuation gains and the Reserve Bank of India's continuous purchase of the US dollar from the market.
China is the largest foreign exchange holder in the world, followed by Japan, Switzerland and India.
According to the latest figure released by the Reserve Bank of India, the country's total foreign exchange reserves were $704.89 billion as of 27 September 2024.
India's foreign exchange reserves have increased by $87.6 billion in 2024 so far. Last year, the Indian foreign exchange reserve increased by around $62 billion.
One of the major reasons for the increase in Indian foreign exchange reserves has been continuous foreign investment in the Indian equity and bond market. It has reached around $30 billion so far. Foreign investment in the Indian debt market has increased after the inclusion of Indian government bonds in the JP Morgan Emerging Market Bond Index.
According to the RBI Act 1934, the Indian foreign exchange reserves include foreign currency assets, Special Drawing Rights (SDRs), a Reserve Tranche Position (RTP) with the IMF, and Gold.
The Foreign Currency Assets include
RBI keeps part of its gold reserve outside India with the Bank of England and the Bank for International Settlement (BIS) and part within India.
Special Drawing Rights (SDR), created in 1969, are an accounting unit of the International Monetary Fund(IMF). They are also known as paper gold.