Prelims: Current events of national and international importance | Economy
Why in News?
Recently, India’s foreign exchange (forex) reserves rose by $12.4 billion to a record $729.3 billion in the week ended August 21, 2026.
Foreign Exchange Reserves
- India’s forex reserves are external assets held by the Reserve Bank of India to meet international payment requirements and maintain confidence in the Indian economy.
- Major components
- Foreign Currency Assets (FCAs)
- Gold reserves
- Special Drawing Rights (SDRs)
- Reserve Tranche Position (RTP) in the IMF
Reasons for the Increase
- RBI’s Concessional Swap Window – Announced on June 5, the swap window mobilised $72.8 billion by August 21, contributing to a $62.4 billion increase in reserves.
- Strong Capital Inflows – The swap facility attracted significant foreign capital, thereby enhancing external liquidity and increasing reserves.
- Revaluation Gains – The appreciation of non-US currencies such as the euro, pound, and yen led to an increase in the dollar value of reserves.
- Increase in FCAs – Foreign Currency Assets increased by $9.48 billion, reaching $591.33 billion and further strengthening the reserves.
Reference
Business Standard | India’s Forex Reserves Rise
