India’s foreign exchange reserves declined by $3.049 billion to $699.736 billion in the week ended July 4, according to the latest data released by the Reserve Bank of India (RBI) on Friday.
This drop comes after a sharp jump in the previous week, when reserves had surged by $4.849 billion to hit $702.785 billion. Notably, India’s forex reserves had touched a record high of $704.885 billion at the end of September last year.
According to the RBI’s weekly statistical supplement, the biggest component of the reserves—foreign currency assets (FCA)—fell by $2.629 billion to $591.287 billion during the week. FCA values reflect not just US dollar holdings but also the impact of movements in other major currencies such as the euro, pound, and yen.
However, gold reserves bucked the overall trend, rising by $342 million to $84.846 billion during the same period. Special Drawing Rights (SDRs) with the International Monetary Fund (IMF) also saw a modest increase of $39 million, taking the total to $18.868 billion.
India’s reserve position with the IMF climbed by $107 million to $4.735 billion.
Foreign exchange reserves are a crucial financial buffer that provides confidence to markets, supports the rupee during external shocks, and covers import bills. Analysts watch these weekly RBI updates closely as they reflect the country’s external strength and currency management strategy.
Despite this week’s decline, India’s forex reserves remain among the world’s largest, giving the RBI significant firepower to manage currency volatility and maintain macroeconomic stability. The central bank actively manages reserves by buying and selling currencies in the market and through changes in gold holdings.
Market participants will be closely watching the trajectory of reserves in the coming weeks, especially in light of global currency movements and capital flows.
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