India’s foreign exchange reserves dropped by USD 14.9 billion to USD 765.9 billion in the week ending September 18, representing the steepest weekly decline since November 15, 2024, according to the latest figures released by the Reserve Bank of India. The overall reserves were USD 780.8 billion the week prior, concluding on September 11.
Foreign currency assets (FCAs), which are the main part of the reserves, fell by USD 14.8 billion to reach USD 631 billion in the reported week.
FCAs, measured in dollar values, encompass the impact of the appreciation or depreciation of foreign currencies like euro, pound and yen that are part of the reserves.
The decline in reserves follows a significant increase in recent weeks as reserves reached a historic USD 785.7 billion during the week ending September 5, due to foreign exchange inflows related to the RBI’s FCNR(B) deposit swap scheme.
Gold reserves rose by USD 68 million to reach USD 111.3 billion in the specified week, whereas special drawing rights (SDRs) fell by USD 106 million to USD 18.7 billion.
According to RBI data, India’s reserve position with the International Monetary Fund (IMF) fell by USD 27 million to USD 4.9 billion.
The drop in reserves happens as the rupee faces pressure from rising crude oil prices and US Treasury yields, leading the RBI to act in the foreign exchange market.
The RBI has been engaging in the foreign exchange market via spot and forward transactions to manage excessive fluctuations in the rupee.
The recent drop comes after a significant rebound in reserves, which had decreased to USD 666.9 billion in the week ending June 26, as the RBI engaged in the foreign exchange market by selling dollars due to the West Asia crisis.
The RBI’s preferential swap facility, which garnered USD 143.6 billion in foreign currency inflows by September 18, has played a vital role in the later increase in reserves.
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