India’s Forex Reserves Slip by $1.183 Billion, Gold Holdings Rise

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India’s foreign exchange reserves declined by $1.183 billion to $695.489 billion during the week ended July 18, according to data released by the Reserve Bank of India (RBI) on Friday. This marks a continued dip from the previous reporting week, when the overall forex kitty had already fallen by $3.064 billion to $696.672 billion.

Despite this recent decline, India’s reserves had reached a record high of $704.885 billion at the end of September 2024.

The fall in reserves this week was primarily due to a reduction in foreign currency assets, which are expressed in dollar terms and include the impact of fluctuations in the value of other currencies like the euro, pound, and yen.

However, the week also saw a positive development. India’s gold reserves increased by $150 million, reaching a total of $84.499 billion. This rise provided some cushion against the overall drop in the forex kitty.

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Meanwhile, the country’s Special Drawing Rights (SDRs) with the International Monetary Fund (IMF) decreased by $119 million, bringing the total down to $18.683 billion. Additionally, India’s reserve position with the IMF saw a marginal decline of $13 million to $4.698 billion.

The movement in India’s foreign exchange reserves is closely monitored as it reflects the country's ability to manage external shocks, finance imports, and stabilize the currency. While the recent declines are modest, they come against the backdrop of currency fluctuations and global financial uncertainty.

The RBI manages the reserves with the primary objective of maintaining confidence in monetary and exchange rate policies, and ensuring adequate foreign exchange liquidity.