FX.co ★ India owes its huge FX reserves to inflows from expatriates

India’s foreign exchange reserves hit a record high of $729.33 billion thanks to an unprecedented influx of funds from citizens living abroad. According to the Reserve Bank of India (RBI), national reserves swelled by $12.4 billion in the week ended August 21, 2025, comfortably eclipsing the previous February record of $728.5 billion.

The main driver of the increase was an emergency capital-raising campaign launched by the central bank in early June. The regulator offered Indian expatriates a special deposit program that worked flawlessly: by the third week of August, this emergency RBI’s campaign had delivered a direct inflow of foreign currency totaling $72.8 billion.

The sharp injection of overseas liquidity solved one of the domestic major macroeconomic problems. The powerful dollar inflow from the diaspora allowed India to avoid a third consecutive year of a current account deficit — the broadest measure of money flows into and out of the economy.