India's foreign exchange reserves rose $10.51 billion to $692.87 billion for the week ending July 31, the Reserve Bank of India said, marking the highest level in more than two months.
The gain was driven by currency valuation gains and a rise in the value of gold holdings. The RBI has actively resumed dollar purchases this month, absorbing excess foreign currency to maintain exchange rate stability.
Gaura Sen Gupta, chief economist at IDFC First Bank, projects reserves could reach approximately $730 billion by September, provided there are no significant revaluation losses from gold or non-dollar denominated assets.
Stronger capital inflows have supported the reserve build, reflecting renewed international confidence in India's economic outlook. A larger reserve cushion reduces the rupee's vulnerability to global market swings and gives the RBI greater capacity to absorb external shocks.
