FOREX RESERVES UPDATE: INDIA SEES $1.88 BILLION DROP AS FCA DECLINES, GOLD HOLDINGS INCREASE | DETAILS

India's foreign exchange reserves declined by $1.877 billion in the week that ended November 28 to $686.227 billion, according to the latest weekly data released by the Reserve Bank of India (RBI). In the last reporting week (November 21), forex reserves declined by $4.472 billion to $688.104 billion, driven by a slump in both foreign currency assets and gold reserves.

Over the past many weeks, the forex kitty has been largely in a downtrend. RBI's 'Weekly Statistical Supplement' data showed that India's foreign currency assets (FCA), the largest component of foreign exchange reserves, stood at $557.031 billion, down $3.569 billion.

Interestingly, gold reserves increased by $1.613 billion to $105.795 billion during the current reporting week. The price of the safe-haven asset gold has been on a sharp uptrend over recent months, perhaps amid heightened global uncertainties and robust investment demand. The data showed that the Special Drawing Rights (SDRs) increased by $63 million to $18.628 billion. The country's reserve position with the International Monetary Fund (IMF) increased by $16 million to $4.772 billion, as per the data.

Foreign exchange reserves, or FX reserves, are assets held by a nation's central bank or monetary authority, primarily in reserve currencies such as the US dollar, with smaller portions in the Euro, Japanese Yen, and Pound Sterling.

In 2023, India added around $58 billion to its foreign exchange reserves, contrasting with a cumulative decline of $71 billion in 2022. In 2024, the reserves rose by a little over $20 billion. So far in 2025, the forex kitty has cumulatively increased by about $48 billion, data showed.

The RBI often intervenes by managing liquidity, including selling dollars, to prevent a steep depreciation of the rupee. The RBI strategically buys dollars when the Rupee is strong and sells when it weakens.

RBI cuts repo rate

RBI Governor Sanjay Malhotra on Friday announced a 25-basis-point cut in the December MPC meeting, bringing the repo rate down to 5.25 per cent. The RBI’s Monetary Policy Committee maintained a neutral stance.

CPI inflation for this year is projected at 2 per cent, down 0.6 per cent from the RBI’s earlier forecast. Q3 is at 0.6 per cent, Q4 at 2.9 per cent, while Q1 and Q2 of FY27 are projected at 3.9 and 4 per cent, respectively. Moreover, RBI projects Q3 GDP at 7 per cent, Q4 at 6.5 per cent, Q1 FY27 at 6.7 per cent, and Q2 FY27 at 6.8 per cent. Risks remain evenly balanced. (With ANI Inputs)

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2025-12-07T20:07:19Z