India’s foreign exchange reserves witnessed a notable decline of $2.334 billion during the week ending September 26, 2025, settling at $700.236 billion, according to the latest data released by the Reserve Bank of India (RBI). This marks the second consecutive weekly drop, following a $396 million dip in the previous reporting period.
Breakdown of Reserve Components
The fall in reserves was primarily driven by a sharp decline in foreign currency assets (FCAs), which dropped by $4.393 billion to $581.757 billion. FCAs represent the largest component of India’s forex reserves and are influenced by fluctuations in the value of non-dollar currencies such as the euro, pound, and yen held by the RBI.
Interestingly, gold reserves saw a significant increase of $2.238 billion, rising to $95.017 billion. This uptick reflects both valuation gains and strategic accumulation amid global economic uncertainties.
Other components also registered minor declines:
- Special Drawing Rights (SDRs) with the International Monetary Fund (IMF) fell by $90 million to $18.789 billion.
- India’s reserve position with the IMF decreased by $89 million to $4.673 billion.
Implications for the Economy
The dip in forex reserves comes at a time when global markets are grappling with heightened volatility, geopolitical tensions, and currency fluctuations. While India’s overall reserve position remains robust—still above the $700 billion mark—the decline in FCAs suggests pressure from currency revaluation and possible dollar outflows.
Economists note that the increase in gold reserves may serve as a hedge against currency depreciation and inflation risks. The RBI’s active management of the reserve mix reflects its strategy to maintain external stability while navigating global headwinds.
Market Reaction and Outlook
Despite the decline in reserves, the Indian equity markets have remained resilient, buoyed by strong domestic demand, festive season momentum, and supportive monetary policy. The RBI’s recent decision to maintain interest rates and introduce capital market reforms has helped sustain investor confidence.
Looking ahead, analysts expect the RBI to continue its calibrated approach to reserve management, balancing intervention with macroeconomic stability.
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