Overview
- The Reserve Bank of India reported on Friday that total foreign-exchange reserves fell by about $1.2–1.3 billion to roughly $719.74–719.8 billion for the latest reporting week.
- Foreign currency assets, the biggest reserve component, rose by about $1.3–1.4 billion to roughly $593.20–593.21 billion while the dollar value of gold holdings fell by about $2.6–2.7 billion to $103.15 billion.
- The reserves have slid for seven straight weeks from a record $785.706 billion in early September after banks took in nearly $133 billion under a special concessional swap for diaspora deposits and then began deploying those funds.
- Market analysts say the downtrend reflects banks’ use of FCNR(B) diaspora deposit resources and active RBI dollar sales to calm currency swings and support the rupee, which has weakened year-to-date.
- Watch for further RBI interventions and shifts in foreign flows because continued use of reserves to smooth the market could tighten liquidity and affect import cover and investor sentiment.