India forex reserves rise by $1.689 billion to reach $688.94 billion in the week ended Dec. 12, the Reserve Bank of India said Friday, attributing the increase to higher gold holdings and stable market management.
Gold And SDR Holdings Push Reserves Higher
India forex reserves increased for a second consecutive week, reaching $688.94 billion, according to data released by the Reserve Bank of India.
The central bank said the rise of $1.689 billion in the week ended Dec. 12 followed a $1.03 billion increase the previous week, signaling continued balance sheet strength amid global volatility.
Gold reserves were a key contributor, rising $758 million to $107.741 billion during the reporting week. Special Drawing Rights also edged higher, increasing $14 million to $18.735 billion, RBI data showed.
In the prior week ended Dec. 5, total reserves stood at $687.26 billion. During that period, gold reserves had climbed $1.188 billion to $106.984 billion, while SDRs rose $93 million to $18.721 billion.
The RBI reiterated its cautious stance on currency movements, saying it remains prepared to act if needed. “The Reserve Bank continues to closely monitor developments in the foreign exchange market and undertakes interventions when required to maintain orderly market conditions,” the central bank said in a statement.
Analysts say strong reserve buffers help India manage external shocks, support the rupee and reassure investors amid fluctuating global interest rates and geopolitical risks.
FDI Inflows Hit Record High In First Half
The increase in reserves comes alongside a sharp rise in foreign direct investment commitments during the current financial year.
Total FDI inflows in the first half of FY 2025–26 stood at $50.36 billion, a 16 percent increase from $43.37 billion in the same period last year, according to data shared with Parliament earlier this month.
Officials said this marks the highest FDI inflow ever recorded in the first half of any financial year. The government attributed the growth to sustained investor confidence and improved policy stability.
India also recorded a strong rebound in the second quarter of the financial year. FDI inflows during April–September 2025 rose more than 18 percent year-on-year to $35.18 billion, official figures showed.
Gross FDI inflows have expanded steadily over the past decade, rising from just over $34 billion in 2012–13 to more than $80 billion in 2024–25, reflecting India’s growing appeal as an investment destination.
Government Flags Investor Returns And Trade Push
The government said rising repatriation trends indicate healthy returns for foreign investors, reinforcing confidence in India’s long-term growth prospects.
“The increase in repatriation reflects strong investor outcomes and underlines India’s position as a reliable and attractive destination for global capital,” officials said in a parliamentary response.
Authorities added that free trade agreements are being used to diversify exports and attract sustained foreign investment across sectors. These efforts aim to strengthen external balances and support economic growth.
Economists note that India forex reserves, along with rising gold holdings and strong FDI inflows, provide the country with a cushion against external pressures while supporting overall macroeconomic stability.
With global markets remaining uncertain, policymakers say maintaining adequate reserves and encouraging long-term capital inflows remain key priorities for the economy.
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