India’s foreign exchange reserves fell by $5.011 billion to $721.016 billion in the week to 16 October, extending a decline linked to central bank intervention and use of FCNR(B) resources.
India’s foreign exchange reserves fell by $5.011 billion to $721.016 billion in the week ended October 16, according to Reserve Bank of India data released on Friday. The latest decline extends a downtrend that has persisted since reserves hit a record $785.706 billion in early September after a strong inflow linked to a special concessional swap for diaspora deposits, when banks raised almost $133 billion.
Economists and market participants said the latest fall reflects both dollar sales by the central bank to support the rupee and the use of FCNR(B) resources. Foreign currency assets, the largest part of the reserve stockpile, slipped by $5.758 billion to $591.847 billion. Those holdings are reported in dollar terms and also reflect movements in other major currencies, including the euro, pound and yen.
Gold holdings moved in the opposite direction, rising by $706 million to $105.8 billion during the week. The Reserve Bank also said special drawing rights increased slightly, while India’s reserve position with the International Monetary Fund edged up to $4.791 billion.
The latest figures come after a sequence of weaker weekly readings. In the previous reporting week, reserves dropped by $8.578 billion to $726.027 billion. Earlier this month, Reuters and other Indian media reported that reserves had already been sliding as the central bank stepped in to limit volatility in the rupee, which has come under pressure from global market moves.
That pattern is not new. In 2023, India’s reserves also retreated for several consecutive weeks, at times reaching five-month lows as the Reserve Bank used its war chest to cushion the currency. Market watchers say such intervention can help smooth abrupt moves in the exchange rate, but it also reduces the headline value of reserves in the short term.
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