India’s forex reserves fall by $6.7 billion after record high

India’s foreign exchange reserves declined by $6.711 billion to $717.064 billion in the week ended 6 February, according to the latest data released by the Reserve Bank of India (RBI). The fall comes just a week after the country’s reserves touched a historic peak of $723.774 billion.

The decline was primarily attributed to a substantial reduction in gold reserves, even as foreign currency assets (FCA) — the largest component of the reserves — recorded an increase during the same period.

For the week under review, foreign currency assets rose by $7.661 billion to $570.053 billion. In contrast, gold reserves dropped sharply by $14.208 billion to $123.476 billion, leading to the overall fall in the reserve stockpile.

Despite the latest dip, India’s reserves have largely followed an upward trajectory in recent weeks. So far in 2025, the forex kitty has expanded by approximately $56 billion. In comparison, reserves increased by just over $20 billion in 2024, while 2023 saw a rise of around $58 billion. This followed a cumulative decline of $71 billion in 2022.

Following its recent monetary policy review earlier this month, the RBI stated that India’s foreign exchange reserves remain adequate to cover more than 11 months of merchandise imports. The central bank also noted that the country’s external sector continues to demonstrate resilience and expressed confidence in comfortably meeting external financing requirements.

Foreign exchange reserves are assets held by a nation’s central bank, typically in major reserve currencies such as the US dollar, with smaller allocations in the euro, Japanese yen and pound sterling.

The RBI actively manages liquidity conditions in the currency market. It generally purchases dollars when the rupee is strong and sells them when the domestic currency comes under pressure, aiming to curb excessive volatility and prevent sharp depreciation.

With PTI input