MUMBAI: India’s foreign exchange reserves fell sharply by $14.881 billion to $765.901 billion in the week ended September 18, driven almost entirely by a steep decline in foreign currency assets, Reserve Bank of India data released Friday showed. The fall followed a $4.924-billion decline in the previous reporting week, when the country’s reserves stood at $780.782 billion.
Taken together, the reserves declined by more than $19.8 billion over the two reporting weeks. The latest weekly decline was overwhelmingly concentrated in foreign currency assets, which constitute the largest component of India’s foreign exchange reserves.
Foreign currency assets slide
Foreign currency assets fell by $14.816 billion to $630.980 billion during the week ended September 18, accounting for almost the entire decline in the headline reserve figure. The assets are expressed in dollar terms but also reflect changes in the value of non-US currencies such as the euro, pound and yen held as part of the reserves.
Movements in the foreign currency asset component can therefore reflect both changes in the underlying holdings and valuation effects arising from fluctuations in major global currencies against the US dollar. The RBI’s weekly data provide the overall movement in the component but do not separately attribute the change to individual factors.
Gold reserves rise
Gold reserves moved in the opposite direction during the week, increasing by $68 million to $111.292 billion. The rise, however, was relatively small compared with the decline in foreign currency assets and was not enough to prevent the overall reserves from recording a substantial weekly fall.
Special Drawing Rights with the International Monetary Fund declined by $106 million to $18.739 billion. India’s reserve position with the IMF stood at $4.89 billion, completing the major components of the country’s foreign exchange reserve stock.
The latest figures marked a second consecutive weekly decline in India’s forex reserves. Despite the sharp fall during the week, the reserve stock remained above $765 billion, providing the RBI with a substantial external buffer against volatility in global financial and currency markets.