Forex reserves slip again: India’s forex kitty falls by $1.18 bn to $695.49 bn, gold holdings rise $150 mn

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 second consecutive weekly drop after the reserves fell by $3.064 billion in the previous week, PTI reported. India’s forex reserves had touched a record high of $704.885 billion in end-September 2024.The decline was led by a fall in foreign currency assets, which dipped by $1.201 billion to $587.609 billion. These assets account for the largest portion of the country’s reserves and are expressed in dollar terms, factoring in the impact of movements in other major currencies such as the euro, pound, and yen.In contrast, India’s gold reserves rose by $150 million during the week to reach $84.499 billion.Meanwhile, the Special Drawing Rights (SDRs) with the International Monetary Fund (IMF) fell by $119 million to $18.683 billion, and India’s reserve position with the IMF declined by $13 million to $4.698 billion.Foreign exchange reserves are considered a buffer against external risks such as fluctuating oil prices, currency volatility, and global financial instability. They serve as an important measure of a country’s ability to finance imports and intervene in the currency markets when needed. The Reserve Bank of India closely manages these reserves to maintain financial stability and bolster confidence in the external sector. The RBI’s weekly statistical supplement, published every Friday, offers a consistent update on India’s forex holdings and its capacity to withstand external shocks.