India's forex reserves hit $740.803 billion after an $11.48 billion weekly rise

India's foreign-exchange reserves rose $11.475 billion to $740.803 billion in the week ended 28 August, the Reserve Bank of India said on Friday, 4 September. That is a new high in nominal dollar terms.

The week before, reserves had already jumped $12.422 billion to $729.328 billion, itself a record at the time. The high before the Middle East war was $728.494 billion in the week ended 27 February. After that peak the RBI sold dollars to steady the rupee, and the headline stock fell. Two large weeks in August have now more than rebuilt it.

Foreign currency assets, the bulk of the pile, rose $9.337 billion to $600.67 billion. Those assets are reported in dollars, so the figure also moves when the euro, pound and yen change against the dollar. Gold reserves rose $2.191 billion to $116.409 billion. Special drawing rights fell $43 million to $18.81 billion. The reserve position at the IMF fell $11 million to $4.914 billion.

What rebuilt the stock

At the February peak, foreign currency assets were $573.13 billion inside a $728.49 billion total. By 28 August those assets were $600.67 billion. Gold is lower than some intra-year marks in dollar value, so the new headline record is a currency-asset story more than a gold story. Desks tracking the central bank point to a special FCNR(B) deposit window and to the RBI's own market operations as the pipes that brought dollars back onto the books.

Foreign currency assets are $48.387 billion above their end-March level and $16.73 billion above a year earlier. Gold is $1.014 billion above end-March and $29.641 billion above a year earlier. The war-year drawdown is visible in the gap between February and the mid-year trough. The August prints close that gap and then some.

What a $740 billion stock buys

A reserve number is not a war chest in the simple sense. It is the RBI's stock of foreign assets after intervention, valuation and other transactions. It buys time in a rupee scare and insurance against an oil shock. Diesel in the United States has just gone through $5.85 a gallon on the same war that forced the February-to-summer drawdown. India's import bill moves with that market even when the rupee is quiet.

Two consecutive weeks of $11-12 billion increases are fast. They can reflect valuation as well as cash inflows. The breakdown published on Friday says most of the latest week was foreign currency assets, with a smaller gold lift and tiny declines in SDRs and the IMF slot. That mix is consistent with dollar purchases and with a softer dollar making non-dollar holdings look larger, or with both.

The RBI does not target a rupee level in public. It does target orderly conditions. A record stock gives it more room to sell if the next oil spike or the next risk-off week arrives before the war insurance is no longer needed. It does not change the fact that the previous record died in February for a reason that has not ended.