India's foreign-exchange reserves have become the fourth largest in the world, surpassing Russia. China has the largest foreign currency reserves followed by Japan and Switzerland.
India's foreign currency holdings, which dropped $4.3 billion to $580.3 billion on March 5 as per the Reserve Bank of India (RBI), surpassed Russia's $580.1 billion, says a Bloomberg report.
India pulled ahead as Russian holdings declined at a faster rate in recent weeks as RBI continues to hoard dollars to cushion the economy against any sudden outflows.
India's foreign-exchange reserves, which is sufficient to cover around 18 months of imports, have been boosted by current-account surplus, rising inflows into the foreign direct investments and the domestic stock market.
Kaushik Das, chief India economist at Deutsche Bank, before the latest data was released, said: "India's various reserves adequacy metrics have improved significantly, particularly in the last few years."
According to the experts, a strong reserves position gives credit rating companies and foreign investors added comfort that the country's government can meet its debt obligations despite a declining fiscal outlook.
The RBI bought a net of $88 billion in the spot forex market in 2020, which helped make the rupee the worst performer among Asia's major currencies and earned a place on a US Treasury watchlist for currency manipulation.