India's foreign exchange reserves hit a record high, building a "firewall" for the rupee exchange rate.

India's foreign exchange reserves have risen to a historic high, enhancing the country's ability to protect the rupee from excessive volatility and speculative attacks. According to data released by the Reserve Bank of India on Friday, foreign exchange reserves increased by approximately $8.05 billion in the week ending January 23, reaching $709.4 billion. This figure surpasses the previous high record of $704.89 billion set in September 2024. The larger reserves provide the central bank with more firepower to intervene and defend the rupee. The rupee has become the worst-performing currency among emerging markets this year due to outflows of funds from the stock market and delays in negotiations for a trade agreement with the United States. Additionally, the widespread increase in gold prices has also contributed to the expansion of the reserves. Due to geopolitical tensions, gold has risen by about 18% this month, potentially achieving the best single-month increase since 1982.