India’s foreign exchange reserves have achieved a historic milestone by surpassing the $702 billion mark, following a $4.5 billion increase during the week ending October 17, as per the latest data released by the Reserve Bank of India (RBI) on October 24. This remarkable rise reflects the country’s growing financial strength and the RBI’s strategic approach to managing external assets amid global economic uncertainties.
The primary driver behind this increase was a sharp rise in gold reserves. The RBI’s gold holdings, which form a crucial part of the overall reserves, expanded by $6.2 billion, taking the total value past the $108.5 billion threshold for the first time in history. This surge was largely influenced by a global rally in gold prices and increased purchases of gold by the central bank, as central banks worldwide turned to the yellow metal as a safe-haven asset during times of heightened geopolitical and economic instability.
However, the foreign currency assets (FCA) — which make up the largest share of India’s total reserves — experienced a decline of $1.7 billion, settling at $570.4 billion. This fall was primarily due to fluctuations in the exchange rates of major global currencies, such as the euro, pound, and yen, against the US dollar. Such movements directly impact the valuation of non-dollar assets held in the country’s forex portfolio.
Meanwhile, India’s reserve position with the International Monetary Fund (IMF) also saw a minor decline of $30 million, standing at $4.62 billion. Despite this, the overall external balance remains strong, supported by robust capital inflows and prudent reserve management by the RBI.
Over the last decade, India’s reserve composition has witnessed a notable transformation. The share of gold in the total reserves has nearly doubled, rising from 7% to approximately 15%. This marks the highest proportion of gold in India’s reserves since 1996–97, showcasing the RBI’s consistent efforts to diversify its reserve assets and reduce dependence on traditional foreign currencies. The increase also reflects the substantial appreciation in global bullion prices, which have surged steadily over the years.
In 2025, global gold prices have soared by almost 65%, driven by geopolitical conflicts, inflationary pressures, and the weakening of major global currencies. As investors and central banks shifted toward gold as a safe investment, its value has risen significantly, benefiting nations like India that hold large gold reserves.
According to a recent Morgan Stanley report, the RBI has added nearly 75 tonnes of gold to its reserves since 2024, bringing the total holdings to about 880 tonnes. Gold now accounts for roughly 14% of India’s total foreign exchange reserves, indicating a clear shift toward a more diversified and resilient reserve structure.
Overall, this rise in reserves underscores India’s strong external position, stable macroeconomic outlook, and proactive reserve management strategy by the RBI. It also positions the country well to withstand global financial shocks, manage currency volatility, and maintain investor confidence in the strength of its economy.
