India’s Forex Reserves Drop $8 Billion To $688.9 Billion As Gold Holdings Decline

New Delhi, May 24: India’s foreign exchange reserves witnessed a sharp decline in the week ended May 15, falling by $8.09 billion to $688.89 billion, according to data released by the Reserve Bank of India (RBI). The fall comes after a brief rise in the previous week and reflects continued pressure on external accounts amid global currency volatility.

The reserves had previously touched a record high of $728.49 billion in February, but have since been fluctuating due to global market uncertainty and central bank interventions to stabilise the rupee.

Foreign Currency Assets See Major Drop

The largest component of India’s reserves—foreign currency assets (FCAs)—fell by $6.48 billion to $545.90 billion during the reporting week.

FCAs include holdings in major global currencies such as the euro, pound sterling, and Japanese yen. Their dollar value also fluctuates depending on exchange rate movements, which adds to volatility in overall reserve figures.

Gold Reserves Also Decline

India’s gold reserves declined significantly by $1.54 billion, bringing the total down to $119.32 billion.

Gold is a key component of the country’s forex reserves and is often used as a hedge against global financial uncertainty. The decline reflects valuation changes in global gold prices during the week.

SDRs And IMF Position Also Edge Lower

Special Drawing Rights (SDRs) with the International Monetary Fund (IMF) fell by $49 million to $18.82 billion, while India’s reserve position with the IMF declined by $25 million to $4.85 billion.

These components represent India’s financial buffer and its monetary relationship with global financial institutions.

RBI Intervention Amid Currency Pressure

The RBI has been actively intervening in the foreign exchange market, primarily through dollar sales, to manage volatility in the rupee amid global geopolitical tensions, including ongoing conflicts in the Middle East.

Such interventions are aimed at preventing sharp depreciation of the domestic currency, though they can temporarily reduce forex reserves.

Government Push To Conserve Foreign Exchange

In response to global economic uncertainty, Prime Minister Narendra Modi has urged citizens to reduce non-essential foreign travel, limit fuel consumption, and avoid gold purchases for a year in order to help conserve foreign exchange reserves.

The appeal reflects broader efforts to stabilise India’s external financial position during a period of global instability.