India’s gold reserves continue to increase, with experts suggesting that safe-haven demand and robust purchases by gold exchange-traded fund (ETF) investors are likely to sustain this trend.
According to the latest data from the Reserve Bank of India (RBI), gold reserves rose by $726 million to $63.613 billion, compared to $62.887 billion the previous week. Gold now stands as the second-largest contributor to India’s foreign exchange reserves.
India’s total foreign exchange reserves reached a new high of $692.296 billion, an increase of $2.838 billion in the week ending September 20.
Global financial firms report that these reserves are at record levels and are expected to surpass $700 billion in the fiscal year 2025, potentially earlier than anticipated.
A recent note from global investment firm Jefferies estimates that RBI's forex reserves could increase by $53 billion, reaching $700 billion in the current fiscal year.
Experts believe that India’s strong foreign exchange reserves will enhance its economic growth trajectory, fortifying its international standing, attracting foreign investments, and bolstering domestic trade and industry.
Notably, Special Drawing Rights (SDRs) grew by $121 million to $18.540 billion as of September 20, compared to $18.419 billion on September 13. Meanwhile, the country’s reserve position with the International Monetary Fund (IMF) fell by $65 million to $4.458 billion.
The central bank actively intervenes in the foreign exchange market to mitigate volatility in the Indian currency.
In related developments, strong foreign institutional investor (FII) buying has persisted this month. FIIs have invested ₹57,359 crore in September alone, with ₹46,480 crore transacted through exchanges. Total FII investments in 2024 now amount to ₹100,245 crore, contributing to the stability of the rupee this year, according to trade analysts.
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