India Forex Reserves Fall $14.9 Billion To $765.9 Billion, Sharpest Weekly Drop Since Nov 2024

India's foreign exchange reserves fell by $14.9 billion to $765.9 billion in the week ending September 18, marking the sharpest weekly decline since November 2024. The Reserve Bank of India (RBI) reported this in a data release on Friday. This drop occurred following a record high of $785.7 billion in the week ended September 5, which was driven by foreign currency inflows through the RBI's FCNR(B) deposit swap scheme.

The largest component of India's reserves, foreign currency assets, declined $14.8 billion to $631 billion during the week. Gold reserves increased by $68 million to $111.3 billion, while special drawing rights (SDRs) decreased by $106 million to $18.7 billion. India's reserve position with the International Monetary Fund (IMF) also fell by $27 million to $4.9 billion.

The decline in reserves comes as the rupee faces pressure from rising crude oil prices and US Treasury yields. The RBI has been employing spot and forward market operations to handle the currency's volatility and has utilized dollar-rupee sell/buy swaps to manage liquidity and support foreign exchange operations. Reserves had previously fallen to $666.9 billion in the week ended June 26 due to RBI dollar sales during the West Asia crisis.

The subsequent recovery was aided significantly by the RBI’s concessional swap window, which mobilized $143.6 billion in foreign currency inflows through September 18.