India’s foreign-exchange reserves have fallen for the first time in over five years after a record stretch of growth, highlighting the central bank’s ongoing efforts to support the rupee amid rising oil prices and global investors trimming exposure.
India’s foreign-exchange reserves have slipped after a powerful run higher, ending what Bloomberg described as the longest stretch of gains in more than five years. The move has drawn attention because the Reserve Bank of India has been using its war chest to steady the rupee as foreign investors continue to trim exposure to Indian equities and oil prices remain a pressure point for the currency. Data from the central bank showed the first decline after ten straight weeks of gains, underscoring how quickly the buffer can be used when policymakers lean against volatility.
According to the Reserve Bank of India, reserves fell by $4.92 billion to $780.78 billion in the week to September 11, with foreign-currency assets down by $2.37 billion to $645.8 billion and gold holdings lower by $12.77 billion to $111.22 billion. Business Standard said the retreat followed a record weekly increase of $44.9 billion, much of it linked to the central bank’s concessional swap window, which had helped lift reserves to a new peak. Even after the drop, the stockpile remained far above a year earlier, leaving India with a sizeable external cushion.
The story did not stop there. Later RBI data reported by The Tribune and Business Standard showed reserves falling again in the weeks to September 18 and September 25, including a record weekly drop of $18.3 billion to $747.6 billion in the latter period. The latest slide was tied to intervention aimed at supporting the rupee, which came under strain as crude prices climbed. Over three weeks, the reserves declined by about $38.2 billion, a reminder that a large buffer can still shrink sharply when the central bank steps in repeatedly.
For investors, the reserve figures matter because they shape confidence in India’s ability to absorb external shocks. Societe Generale strategists told FXStreet that the earlier surge, boosted in part by mobilisation measures such as the FCNR(B) scheme, strengthened the RBI’s hand in smoothing exchange-rate swings. But they also said the pace of accumulation was likely to ease, especially with higher oil prices and less favourable yield spreads weighing on the rupee’s appeal to carry traders.
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