Record forex reserves to boost economy, promote domestic trade: Industry

New Delhi, Aug 31: The record all time high level of India’s forex reserves will create external sector resilience and boost economy across sectors, industry experts said on Saturday, as the country’s forex reserves surged $7.023 billion to touch a new high of $681.68 billion in the week ended August 23.

Sanjeev Agrawal, President, PHD Chamber of Commerce and Industry, said that with the support of strategic policy initiatives and a diligent monetary policy stance, the forex has reached a record all time high, amid global economic head winds and deepening geopolitical uncertainties. “This will boost India's economy on a faster development trajectory, strengthening its position internationally, drawing in foreign investments, and promoting domestic trade and industry,” Agrawal noted.

The overall forex reserves had jumped $4.546 billion to $674.664 billion in the previous reporting week. The previous all time high for the overall reserves was recorded at $674.919 billion as of August 2. Gold reserves increased by $893 million to $60.997 billion during the week. Moving ahead, said industry experts, the country's substantial foreign exchange reserves will provide the RBI greater flexibility in monetary policy and currency management.

Foreign currency assets, a major component of the reserves, has increased by $5.983 billion to $597.552 billion, the latest RBI data showed. India’s reserve position with the IMF was up by $30 million to $4.68 billion in the reporting week, according to the latest data. Economist Aman Aggarwal said India is also the fourth largest foreign exchange reserve holder in the world, along with one of the largest FDI recipients in the world.

Foreign direct inflows to India rose by 26.4 per cent, reaching $22.4 billion during April-June 2024, marking the fastest expansion in nearly five quarters, according to the Central Bank. The country has become the favourite destination for investment globally which is creating this rebounding effect for the country, said Aggarwal.