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    India’s foreign exchange reserves rose from $687.19 billion to $701.36 billion in January.

    by VT Markets
    /
    Jan 23, 2026
    India’s foreign exchange reserves reached $701.36 billion on January 12, 2026, an increase from $687.19 billion. This is a rise of $14.17 billion. These reserves help protect the economy against shocks and strengthen the country’s financial stability. The increase also indicates a solid external account balance.

    Record High in Reserves

    India’s foreign exchange reserves have hit a record high, exceeding $701 billion. This is a strong indicator for the market. With this large reserve, the Reserve Bank of India can effectively manage currency fluctuations. We anticipate that this will help keep the Indian Rupee stable against the US Dollar in the weeks ahead. For those trading USD/INR derivatives, this suggests lower implied volatility. The RBI’s ability to step in makes sudden drops in the Rupee less likely. Selling option strangles on this currency pair might be a smart strategy to earn premium from expected stability. Looking back to late 2025, when there were market concerns due to global inflation data, the current reserves provide a solid buffer against similar external shocks. Data from 2023-2024 showed that when reserves were strong, the Rupee’s one-month volatility often stayed under 5%. We are witnessing a similar trend now, with the current implied volatility for February contracts hitting an 18-month low.

    Positive Impact on Equities

    This stability positively affects equities by boosting the confidence of foreign portfolio investors (FPIs). In just the first three weeks of January 2026, net FPI inflows reached $4.2 billion, a notable recovery from the outflows in the last quarter of 2025. This renewed interest is likely to support key indices like the Nifty 50. Given this environment, we should explore bullish yet cost-effective strategies for equity indices. Buying Nifty 50 call spreads for February and March could allow us to profit from a potential market increase. This approach limits risk while taking advantage of the positive sentiment driven by solid macroeconomic stability. Create your live VT Markets account and start trading now.

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