India's forex reserves rebound, climbs $938 million to $682.32 billion

India's foreign exchange reserves rose by $938 million to $682.321 billion in the week ended May 28, reversing the decline recorded in the previous week, according to data released by the Reserve Bank of India (RBI) on Friday. 

The country's forex reserves had fallen by $7.511 billion to $681.384 billion in the preceding reporting week.

Despite the recent volatility, India's reserves remain among the highest globally, although they are below the record high of $728.494 billion reached in the week ended February 27.

The reserve stockpile came under pressure in recent months following the outbreak of conflict in the Middle East, which prompted the RBI to intervene in the foreign exchange market through dollar sales to support the rupee.

Prime Minister Narendra Modi has also appealed to citizens since May 11 to help conserve foreign exchange by reducing foreign travel, limiting fuel consumption and avoiding gold purchases for a year.

According to the RBI data, foreign currency assets (FCAs), which constitute the largest share of the country's reserves, increased by $3.116 billion to $546.148 billion during the reporting week.

FCAs, expressed in dollar terms, reflect the impact of fluctuations in major non-US currencies such as the euro, pound sterling and Japanese yen held in the reserves.

However, the value of India's gold reserves declined by $2.186 billion to $112.6 billion during the week.

The country's holdings of Special Drawing Rights (SDRs) with the International Monetary Fund remained unchanged at $18.747 billion.

Meanwhile, the RBI expressed optimism about foreign investment inflows into the country.

Speaking at the post-monetary policy press conference, RBI Deputy Governor Poonam Gupta said gross foreign direct investment (FDI) inflows are expected to exceed $100 billion in the current financial year 2026-27.

Gupta noted that gross FDI inflows had reached $95 billion in FY26, supported by healthy private capital formation and a rising investment-to-GDP ratio.

She said foreign investment could potentially rise to $110 billion or even $120 billion in FY27, describing the increase as a long-term structural trend rather than a one-year phenomenon.

“Private capital formation numbers actually have been very healthy. Investment-to-GDP ratio has been turning upwards,” Gupta said, adding that India is likely to witness stronger FDI inflows in the coming years despite global economic uncertainties.