India’s foreign exchange reserves declined by $8.578 billion to $726.027 billion in the week ended October 9, continuing the recent downward trend from the record high reached in early September.
Mumbai, October 16 — India’s foreign exchange reserves fell by $8.578 billion to $726.027 billion during the week ended October 9, according to data released by the Reserve Bank of India on Friday.
In the previous reporting week, the reserves had declined by $12.952 billion to $734.606 billion.
India’s forex reserves had touched an all-time high of $785.706 billion in the week ended September 4. The record level was supported by a large inflow of foreign currency under a special concessional swap scheme for deposits from the Indian diaspora.
Under the scheme, banks raised nearly $133 billion, which helped push the reserves to a record level. Since then, however, the overall forex kitty has been on a declining trend.
For the week ended October 9, foreign currency assets, the largest component of the reserves, declined by $7.142 billion to $597.605 billion.
Foreign currency assets are expressed in US dollar terms and also reflect the impact of movements in non-US currencies such as the euro, pound and yen held by the central bank.
The value of India’s gold reserves also fell during the week, declining by $1.319 billion to $105.094 billion.
Meanwhile, Special Drawing Rights (SDRs) with the International Monetary Fund decreased by $109 million to $18.548 billion.
India’s reserve position with the IMF also declined marginally by $10 million to $4.78 billion.
Foreign exchange reserves are an important buffer for the economy because they help the central bank manage external shocks, currency volatility and international payment obligations.
The recent decline comes after the sharp build-up in reserves seen in September, when large foreign currency inflows pushed the total to a record high.
Despite the latest fall, India continues to hold a substantial level of forex reserves, providing a significant cushion against volatility in global currency and financial markets.
