Indian forex reserves climbed even as the rupee logged its sharpest weekly loss in more than three years.
Indian forex reserves hit fresh high
India’s foreign exchange reserves rose by 2.362 billion dollars to 703.308 billion dollars in the week ended 17 April, according to Reserve Bank of India data.
This latest increase has taken the Indian forex reserves back above the 703 billion dollar mark, extending gains for a third straight week.
Foreign currency assets, the largest component of Indian forex reserves, increased by about 1.48 billion dollars to 557.463 billion dollars, helped in part by valuation gains in major currencies such as the euro, pound and yen.
Gold holdings also rose, with the value of RBI’s gold reserves up by roughly 790 million dollars to 122.133 billion dollars, while Special Drawing Rights climbed to 18.841 billion dollars and the IMF reserve position edged higher to 4.87 billion dollars.
Rupee posts steepest weekly loss since 2022
The support from rising Indian forex reserves has not stopped the rupee from sliding.
The currency weakened in all five trading sessions of the latest week, closing around 94.24 to the US dollar and recording a weekly drop of about 1.4 per cent, its heaviest since September 2022.
The rupee has now lost about 4.5 per cent so far in April and nearly 10 per cent in the current financial year, underscoring sustained pressure despite interventions and earlier trading curbs.
It recently hit a record low near 94.24 against the dollar amid heightened risk aversion, rising US yields and outflows from emerging markets.
Oil shock and US–Iran tensions weigh on currency
Analysts point to the latest spike in crude prices, driven by renewed tensions and a fragile ceasefire between the United States and Iran, as a key drag on the rupee.
Brent crude has traded back above 100 dollars a barrel in recent sessions, lifting India’s import bill and increasing demand for dollars from oil marketing companies.
India imports the vast majority of its oil, so a sustained period of triple‑digit crude prices tends to widen the current account deficit and pressure the currency, even when Indian forex reserves are ample.
Market participants say the central bank has been active in both directions in recent months-selling dollars during the March rout and later rebuilding stocks, as it tries to smooth volatility rather than defend any specific rupee level.
RBI walks tightrope between stability and speculation
After heavy dollar sales in March, when overall reserves dropped by more than 40 billion dollars over several weeks, the RBI has shifted back to net purchases as conditions stabilised and speculative positions were curbed.
Regulatory curbs on forex trading helped the rupee briefly recover into the 92.50-93 band in early April, but the currency has come under pressure again as many of those restrictions were rolled back.
For now, elevated Indian forex reserves give policymakers a sizeable buffer to manage further bouts of volatility.
But with oil markets still jittery and geopolitical risks unresolved, traders expect the rupee to remain vulnerable to global shocks even if the headline reserve figure continues to look strong.
