India's forex reserves hit record $729 billion on sustained capital inflows

India's foreign exchange reserves rose to $729.33 billion in the week ending August 21, a fresh high according to central bank data reported by Business Recorder. The total has now climbed for eight straight weeks, adding about $63 billion and moving past the peak reached in February.

In June, India introduced measures such as discounted hedging for overseas borrowing by state-run firms and banks to draw in dollars. The central bank took in close to $73 billion under these schemes in the period from June 5 through August 21, including around $65 billion from non-resident Indian deposits, which prompted it to close the deposit hedging window a month early, at end-August.

For the week itself, reserves rose $12.4 billion, with a $9.5 billion increase in foreign currency assets and a $2.8 billion gain in gold holdings. Gaura Sen Gupta, chief economist at IDFC First Bank, said the rise combined RBI dollar buying with revaluation gains, led by the FCNR-B swap window as banks sought deposits before it closes. Bankers said the central bank's frequent rupee-support interventions have likely offset part of the overseas inflows.