India’s forex reserves drop USD 11.68 bn to USD 716.81 bn

India’s foreign exchange reserves declined by USD 11.683 billion to USD 716.810 billion during the week ended March 6, according to data released by the Reserve Bank of India (RBI) on Friday.

The fall comes after a sharp rise in the previous reporting week, when the country’s forex reserves had increased by USD 4.885 billion , reaching an all-time high of USD 728.494 billion .

A major contributor to the latest decline was a drop in foreign currency assets (FCA) , which form the largest component of the reserves. During the week under review, FCAs fell by USD 9.880 billion to USD 563.245 billion , the RBI data showed.

Foreign currency assets, expressed in dollar terms, also reflect the impact of fluctuations in non-US currencies held in the reserves. These include movements in currencies such as the euro, pound sterling, and Japanese yen, whose appreciation or depreciation affects the overall valuation of the reserves.

The gold reserves held by the central bank also registered a decline during the same period. Their value dropped by USD 1.612 billion , taking the total gold holdings to USD 130.017 billion .

Apart from these components, the country’s Special Drawing Rights (SDRs) with the International Monetary Fund (IMF) also saw a marginal dip. According to the RBI, SDRs decreased by USD 149 million to USD 18.210 billion during the reporting week.

India’s reserve position with the IMF also edged lower. It declined by USD 42 million to USD 5.338 billion , the central bank said.

Forex reserves serve as a crucial financial buffer against external shocks and help the RBI maintain stability in the currency markets by enabling it to intervene when necessary. They also support the country in meeting import requirements and external debt obligations.

Despite the weekly decline, India continues to hold one of the largest foreign exchange reserve stockpiles in the world , providing a strong cushion to manage global financial volatility and maintain confidence in the economy.