BofA expects India's forex reserves to reach US$ 745 billion in March 2026

According to Bank of America, India’s foreign-exchange reserves are projected to reach US$ 745 billion by March 2026, providing the central bank with enhanced capacity to influence the rupee. Analysts Mr. Rahul Bajoria and Mr. Abhay Gupta noted that the monetary authority appears relaxed about accumulating larger forex reserves, driven by a desire to establish buffers against potential external risks. While India’s reserve adequacy remains strong compared to other major emerging markets, it is not excessive.

India holds the world’s fourth-largest foreign reserves at US$ 692 billion, bolstered by increasing overseas inflows into the country’s stocks and bonds, which have enabled the Reserve Bank of India (RBI) to elevate its stockpile to a record high. This substantial amount offers stability to the rupee amid external shocks, with the RBI utilizing its reserves to mitigate extreme fluctuations in the currency, which is hovering near a record low. RBI Governor Mr. Shaktikanta Das has consistently emphasized the importance of building a forex buffer to safeguard against market volatility. Mr. Rahul Bajoria and Mr. Abhay Gupta remarked, “USD/INR’s wider daily ranges recently have created some wiggle room for limited INR appreciation and higher volatility than the past year.” They added that the RBI can achieve its dual objectives of increasing reserves while maintaining currency competitiveness and allowing for gradual INR appreciation.

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