India's forex future: a data-driven ARIMA forecast up to 2030
Aditya Sarkar, Ashish Kumar Sana, Biswajit PaulPurpose
This study empirically investigates the trend and evolution of India's foreign exchange reserves over the period 1966 to 2024 and forecast reserves for the years 2025–2030. It also highlights how these reserves support economic growth, financial stability and long-term development.
Design/methodology/approach
Data on foreign exchange reserves are collected from the Reserve Bank of India (RBI). The Augmented Dickey–Fuller (ADF) test is used to examine stationarity, and first differencing is applied to stabilize the series. The Autoregressive Integrated Moving Average (ARIMA) (1,1,4) model is identified as the best-fit forecasting model, based on the highest R-squared and lowest Akaike Information Criterion, Hannan–Quinn and Schwarz criterion values. The Ljung–Box test confirms the adequacy of the model.
Findings
The forecast indicates that India's foreign exchange reserves will continue to rise during the period 2025–2030. This growth is supported by strong exports, foreign investments, International settlements and government programs such as Atmanirbhar Bharat. This upward trend indicates stronger financial resilience and an improved capacity to address global economic challenges.
Originality/value
This study provides a long-term analysis of India's foreign exchange reserves using RBI data spanning nearly six decades. It offers a reliable ARIMA-based forecast that supports policymakers and financial analysts in strategic planning and economic decision-making.