India’s foreign exchange reserves declined for the second consecutive week, falling by $12.952 billion to $734.606 billion in the week ended October 2, according to data released by the Reserve Bank of India (RBI) on Friday.
The latest decline follows a drop of $18.343 billion in the previous week, when reserves stood at $747.557 billion as of September 25. The latest figures show that both foreign currency assets and gold reserves contributed to the overall fall.
Forex Reserves Decline for Two Straight Weeks
RBI data shows that India’s foreign exchange reserves recorded substantial declines in two consecutive weeks. The combined reduction over this period comes as the country’s reserve position moves further away from its recent record high.
Foreign exchange reserves are an important indicator of a country’s external financial strength and help support its ability to manage international payments and currency-market pressures.
Reserves Hit a Record High in September
India’s foreign exchange reserves reached an all-time high of $785.706 billion in the week ended September 4.
According to the RBI, banks attracted significant foreign currency deposits through a special concessional swap arrangement involving deposits held by non-resident Indians. The arrangement helped banks raise approximately $133 billion, contributing to the record level of reserves.
Since that peak, the reserve position has experienced a notable decline.
Foreign Currency Assets and Gold Reserves Fall
Foreign currency assets, the largest component of India’s forex reserves, fell by $10.664 billion during the week ended October 2 to $604.747 billion.
These assets include holdings in currencies such as the euro, pound and yen. Changes in the exchange rates of these currencies against the US dollar can affect their reported dollar value.
Gold reserves also registered a decline. Their value dropped by $2.288 billion during the week to $106.413 billion, according to the RBI. Since gold forms a significant part of the country’s reserve holdings, changes in its valuation can influence the overall total.
SDR Holdings Rise, but IMF Reserve Position Declines
The RBI data showed a slight increase in India’s Special Drawing Rights (SDR), which rose by $15 million to $18.656 billion during the week ended October 2.
In contrast, India’s reserve position with the International Monetary Fund (IMF) decreased by $15 million to $4.789 billion.
The movements across foreign currency assets, gold, SDRs and the IMF reserve position together determined the overall change in India’s foreign exchange reserves during the reporting week.
Disclaimer
This article is intended for general informational purposes only and is based on the RBI data provided. Foreign exchange reserves and their individual components may change from week to week due to market movements, currency valuations and other factors. Readers should refer to official RBI releases for the latest figures.
