India’s Foreign Exchange Reserves Decline by $1.269 Billion to $719.748 Billion

India's foreign exchange reserves saw a further decline during the week ended October 30, dropping by $1.269 billion to stand at $719.748 billion. This follows a previous week's drop of $5.011 billion, continuing a downward trend since reserves reached an all-time high in September.

India’s foreign exchange reserves declined further during the week ended October 30, according to data released by the Reserve Bank of India (RBI) on Friday.

The overall reserves dropped by USD 1.269 billion to stand at USD 719.748 billion. This follows a previous reporting week ended October 16, during which reserves had dropped by USD 5.011 billion to USD 721.016 billion.

Foreign exchange reserves had previously touched an all-time high of USD 785.706 billion for the week ended September 4. That peak was driven by a heavy flow of currency as part of a special concessional swap for deposits from the diaspora, through which banks raised a record sum of nearly USD 133 billion. Since then, the reserves have remained on a declining trend.

Market experts attribute this sharp decline in the reserve kitty to the deployment of FCNR(B) resources and ongoing currency defence measures implemented by the RBI through dollar sales.

A breakdown of the components shows that for the week ended October 23, foreign currency assets increased by USD 1.358 billion to USD 593.205 billion. The RBI noted that foreign currency assets, expressed in dollar terms, also account for the effects of appreciation or depreciation of non-US units—such as the euro, pound, and yen—held within the reserves.

Other components saw varying movements during the reporting period. The value of gold reserves decreased by USD 2.65 billion to USD 103.15 billion. Meanwhile, Special Drawing Rights (SDRs) rose by USD 27 million to reach USD 18.605 billion. India’s reserve position with the International Monetary Fund (IMF) saw a marginal decrease of USD 4 million, bringing it to USD 4.787 billion.

"The steady decline in India's forex reserves from their September peak reflects active central bank management, including currency defense through dollar sales and the deployment of FCNR(B) resources. While reserves remain substantial at over $719 billion, businesses and macroeconomic analysts must monitor these adjustments closely, as currency fluctuations and gold reserve valuations directly influence broader liquidity, import costs, and macroeconomic stability in the domestic market." — Dr. Shishir Gupta, Founder & CEO, StartupLanes